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Unions’ Coordination and the Central Banker’s behavior in a Monetary Union

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  • Borda, Patrie
  • Gaumont, Damien
  • Manioc, Olivier

Abstract

In a 2-country monetary union, this paper studies a Stackelberg game be- tween the Central Banker and two symmetrical countries. The central banker chooses the money supply. In each country, there is a union who acts as a monopoly of labor supply. Firms are wage and price takers. We analyze the effects of internationally coordinated unions versus internationally uncoor-dinated unions. It is shown that wages are lower when unions are interna- tionally coordinated and the money policy is more accomodating. This result is linked to the degree of conservatism of the Central Banker with respect to inflation.1

Suggested Citation

  • Borda, Patrie & Gaumont, Damien & Manioc, Olivier, 2011. "Unions’ Coordination and the Central Banker’s behavior in a Monetary Union," MPRA Paper 50293, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:50293
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    References listed on IDEAS

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    More about this item

    Keywords

    Monetary Union; International Union Coodination; Employment and Wage-Setting.;
    All these keywords.

    JEL classification:

    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • J5 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects

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