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Is a conservative central banker a (perfect) substitute for wage coordination?

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  • Nicola Acocella

    (University of Rome La Sapienza)

  • Giovanni Di Bartolomeo

    (University of Rome La Sapienza)

Abstract

In a monetary union, macroeconomic policies are strongly associated with externalities that seem to imply the need for macroeconomic policy coordination. However, if coordination is not complete, partial coordination might be unable to cope with the negative externalities arising from a decentralized policy management. This paper investigates different solutions for internalizing policy externalities. In particular, we compare wage coordination to the conservative central banker solution, which is found by recent literature able to impose wage moderation to the labor unions. We also discuss some aspects related to labor flexibility reforms as a solution for the unemployment problem.

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Bibliographic Info

Paper provided by EconWPA in its series Macroeconomics with number 0307011.

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Length: 13 pages
Date of creation: 30 Jul 2003
Date of revision:
Handle: RePEc:wpa:wuwpma:0307011

Note: Type of Document - pdf; prepared on IBM PC; pages: 13 ; figures: included/request from author/draw your own
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Web page: http://128.118.178.162

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Keywords: Conservative central bank budget constraints wage coordination monetary union;

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  10. Nicola Acocella & Giovanni Di Bartolomeo, 2002. "Non-neutrality of monetary policy in policy games," Working Papers 49, University of Rome La Sapienza, Department of Public Economics.
  11. Cukierman, Alex & Lippi, Francesco, 1999. "Central bank independence, centralization of wage bargaining, inflation and unemployment:: Theory and some evidence," European Economic Review, Elsevier, vol. 43(7), pages 1395-1434, June.
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