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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
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Web page: http://www.bancaditalia.it

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