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Unions, Wage Setting and Monetary Policy Uncertainty

  • Gruener Hans Peter


    (University of Mannheim and CEPR)

  • Hayo Bernd


    (Philipps-University Marburg)

  • Hefeker Carsten


    (University of Siegen)

Recent theoretical research has studied extensively the link between wage setting and monetary policymaking in unionized economies. This paper addresses the question of the role of monetary uncertainty from both a theoretical and empirical point of view. Our analysis is based on a simple model that derives the influence of monetary uncertainty on unionized wage setting. We construct an indicator of monetary policy uncertainty and test our model with data for the G5 countries. The central finding is that monetary policy uncertainty has a negative impact on nominal wage growth in countries where wage setting is relatively centralized.

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Article provided by De Gruyter in its journal The B.E. Journal of Macroeconomics.

Volume (Year): 9 (2009)
Issue (Month): 1 (October)
Pages: 1-25

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Handle: RePEc:bpj:bejmac:v:9:y:2009:i:1:n:40
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