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Uncertainty, Wage Setting and Decision Making in a Monetary Union

  • Carsten Hefeker

The enlargement of the European Monetary Union is likely to lead to an increase in uncertainty regarding the transmission of monetary policy for the larger union. Adding new members to the central bank council will in addition imply that the policy reaction of the enlarged council will be uncertain in the initial period. The paper considers the influence of both types of uncertainty on wage-setting behavior in the larger monetary union and its effects on unemployment. In light of these effects, I also derive implications for the adequate structure of the central bank.

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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 1485.

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Date of creation: 2005
Date of revision:
Handle: RePEc:ces:ceswps:_1485
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  1. Cukierman, Alex & Lippi, Francesco, 1999. "Labour Markets and Monetary Union: A Strategic Analysis," CEPR Discussion Papers 2236, C.E.P.R. Discussion Papers.
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  12. Georgy Ganev & Krisztina Molnar & Krzysztof Rybinski & Przemyslaw Wozniak, 2002. "Transmission Mechanism of Monetary Policy in Centraland Eastern Europe," CASE Network Reports 0052, CASE-Center for Social and Economic Research.
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  14. Peter B. Kenen & Ellen E. Meade, 2003. "EU Accession and the Euro: Close Together or Far Apart?," Policy Briefs PB03-09, Peterson Institute for International Economics.
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  16. Paul De Grauwe & Marc-Alexandre Sénégas, 2003. "Monetary Policy in EMU when the Transmission is Asymmetric and Uncertain," CESifo Working Paper Series 891, CESifo Group Munich.
  17. Carsten Hefeker, 2001. "Federal Monetary Policy," CESifo Working Paper Series 422, CESifo Group Munich.
  18. Baldwin, Richard & Berglöf, Erik & Giavazzi, Francesco & Widgrén, Mika, 2000. "EU Reforms for Tomorrow’s Europe," CEPR Discussion Papers 2623, C.E.P.R. Discussion Papers.
  19. De Grauwe, Paul, 2000. "Monetary Policies In The Presence Of Asymmetries," CEPR Discussion Papers 2393, C.E.P.R. Discussion Papers.
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