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Strategic Monetary Policy with Non-Atomistic Wage Setters

  • Francesco Lippi

Monetary policy analyses usually assume an atomistic private sector, thereby ignoring potential interactions between policy and wage-setting decisions. Yet, non-atomistic wage setters are a key feature of several industrialized economies. We study the economic consequence of non-atomistic agents and show that this qualifies previous results on the effects and desirability of a conservative central banker. In particular, the central bank aversion to inflation may have a permanent effect on structural employment, while no such effect emerges with atomistic agents. Copyright The Review of Economic Studies Limited, 2003.

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Article provided by Wiley Blackwell in its journal Review of Economic Studies.

Volume (Year): 70 (2003)
Issue (Month): 4 (October)
Pages: 909-919

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Handle: RePEc:bla:restud:v:70:y:2003:i:4:p:909-919
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