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Wage-setting patterns and monetary policy: International evidence

  • Olivei, Giovanni
  • Tenreyro, Silvana

Systematic differences in the timing of wage-setting decisions among industrialized countries provide an ideal framework to study the importance of wage rigidity for the transmission of monetary policy. Synchronization in wage-setting decisions is prevalent in Japan and the United States, yielding varying degrees of wage rigidity within the year; instead, in France, Germany, and the United Kingdom decisions are more uniformly spread over time. Exploiting within-year variation in the timing of wage-setting decisions in these economies, we find support for the long-held but scarcely tested view that wage rigidity plays a critical role in the transmission of monetary policy.

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Article provided by Elsevier in its journal Journal of Monetary Economics.

Volume (Year): 57 (2010)
Issue (Month): 7 (October)
Pages: 785-802

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Handle: RePEc:eee:moneco:v:57:y:2010:i:7:p:785-802
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505566

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