Monetary Union and Precautionary Labour-Market Reform
The paper demonstrates that policy makers have a precautionary motive to undertake more labour-market reform - and hence attain lower equilibrium unemployment - inside a monetary union than outside. The reason is a desire to reduce the utility cost of variations in employment when asymmetric shocks can no longer be stabilised through domestic monetary policy.
|Date of creation:||01 Nov 1998|
|Date of revision:|
|Contact details of provider:|| Postal: Institute for International Economic Studies, Stockholm University, S-106 91 Stockholm, Sweden|
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