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The welfare effect of foreign monetary conservatism with non-atomistic wage setters

  • Vincenzo Cuciniello

    ()

    (Bank of Italy)

This paper extends the closed economy analysis of strategic interaction between labor unions and the monetary authority in Lippi (REStud 2003) to a two-country open economy framework. It sheds light on the real effect of foreign central bank conservatism, which�through a strategic mechanism that operates via the terms of trade between the two independent monetary policy makers�entails wage moderation. The impact of domestic central bank conservatism hinges instead on the combination of three strategic effects.

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File URL: http://www.bancaditalia.it/pubblicazioni/temi-discussione/2011/2011-0810/en_tema_810.pdf
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Paper provided by Bank of Italy, Economic Research and International Relations Area in its series Temi di discussione (Economic working papers) with number 810.

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Date of creation: Jun 2011
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Handle: RePEc:bdi:wptemi:td_810_11
Contact details of provider: Postal: Via Nazionale, 91 - 00184 Roma
Web page: http://www.bancaditalia.it

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  1. Francesco Lippi, 2003. "Strategic Monetary Policy with Non-Atomistic Wage Setters," CEIS Research Paper 17, Tor Vergata University, CEIS.
  2. Steinar Holden, 2002. "Wage Setting Under Different Monetary Regimes," CESifo Working Paper Series 632, CESifo Group Munich.
  3. Rogoff, Kenneth, 1985. "The Optimal Degree of Commitment to an Intermediate Monetary Target," The Quarterly Journal of Economics, MIT Press, vol. 100(4), pages 1169-89, November.
  4. Fagan, Gabriel & Henry, Jérôme & Mestre, Ricardo, 2001. "An area-wide model (AWM) for the euro area," Working Paper Series 0042, European Central Bank.
  5. Guzzo, Vincenzo & Velasco, Andres, 1999. "The case for a populist Central Banker," European Economic Review, Elsevier, vol. 43(7), pages 1317-1344, June.
  6. repec:cup:cbooks:9780521823081 is not listed on IDEAS
  7. Stefano Gnocchi, 2009. "Non-Atomistic Wage Setters and Monetary Policy in a New Keynesian Framework," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 41(8), pages 1613-1630, December.
  8. Alex Cukierman, 1992. "Central Bank Strategy, Credibility, and Independence: Theory and Evidence," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262031981, June.
  9. Stephen Nickell & Luca Nunziata & Wolfgang Ochel, 2005. "Unemployment in the OECD Since the 1960s. What Do We Know?," Economic Journal, Royal Economic Society, vol. 115(500), pages 1-27, 01.
  10. Coricelli, Fabrizio & Cukierman, Alex & Dalmazzo, Alberto, 2001. "Economic Performance and Stabilization Policy in a Monetary Union with Imperfect Labour and Goods Markets," CEPR Discussion Papers 2745, C.E.P.R. Discussion Papers.
  11. Lars Calmfors, 2001. "Wages and Wage-Bargaining Institutions in the Emu : A Survey of the Issues," CESifo Working Paper Series 520, CESifo Group Munich.
  12. Blanchard, Olivier Jean & Kiyotaki, Nobuhiro, 1987. "Monopolistic Competition and the Effects of Aggregate Demand," American Economic Review, American Economic Association, vol. 77(4), pages 647-66, September.
  13. George J. Bratsiotis & Christopher Martin, . "Stabilisation, Policy Targets and Unemployment in Imperfectly Competitive Economies," Economics and Finance Discussion Papers 98-08, Economics and Finance Section, School of Social Sciences, Brunel University.
  14. 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.
  15. Calmfors, Lars, 2001. "Wages and wage-bargaining institutions in the EMU – a survey of the issues," Seminar Papers 690, Stockholm University, Institute for International Economic Studies.
  16. Giancarlo Corsetti & Paolo Pesenti, 1997. "Welfare and Macroeconomic Interdependence," NBER Working Papers 6307, National Bureau of Economic Research, Inc.
  17. Henrik Jensen, 1993. "International monetary policy cooperation in economies with centralized wage setting," Open Economies Review, Springer, vol. 4(3), pages 269-285, September.
  18. repec:ner:tilbur:urn:nbn:nl:ui:12-191854 is not listed on IDEAS
  19. Fabrizio Coricelli & Alex Cukierman & Alberto Dalmazzo, 2006. "Monetary Institutions, Monopolistic Competition, Unionized Labor Markets and Economic Performance," Scandinavian Journal of Economics, Wiley Blackwell, vol. 108(1), pages 39-63, 03.
  20. Christopher J. Erceg & Dale W. Henderson & Andrew T. Levin, 1999. "Optimal monetary policy with staggered wage and price contracts," International Finance Discussion Papers 640, Board of Governors of the Federal Reserve System (U.S.).
  21. Korpos, A., 2006. "Monetary regimes in open economies," Other publications TiSEM 856f672e-aa8d-48ea-b129-f, Tilburg University, School of Economics and Management.
  22. Cavallari, Lilia, 2001. "Inflationary performance in a monetary union with large wage setters," ZEI Working Papers B 11-2001, ZEI - Center for European Integration Studies, University of Bonn.
  23. David Soskice & Torben Iversen, 2000. "The Nonneutrality Of Monetary Policy With Large Price Or Wage Setters," The Quarterly Journal of Economics, MIT Press, vol. 115(1), pages 265-284, February.
  24. Lars Calmfors, 2001. "Wages and Wage-Bargaining Institutions in the EMU – A Survey of the Issues," Empirica, Springer, vol. 28(4), pages 325-351, December.
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