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Is a conservative central banker a (perfect) substitute for wage coordination?

  • Nicola Acocella

    (University of Rome La Sapienza)

  • Giovanni Di Bartolomeo

    (University of Rome La Sapienza)

In a monetary union, macroeconomic policies are strongly associated with externalities that seem to imply the need for macroeconomic policy coordination. However, if coordination is not complete, partial coordination might be unable to cope with the negative externalities arising from a decentralized policy management. This paper investigates different solutions for internalizing policy externalities. In particular, we compare wage coordination to the conservative central banker solution, which is found by recent literature able to impose wage moderation to the labor unions. We also discuss some aspects related to labor flexibility reforms as a solution for the unemployment problem.

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Paper provided by EconWPA in its series Macroeconomics with number 0307011.

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Length: 13 pages
Date of creation: 30 Jul 2003
Date of revision:
Handle: RePEc:wpa:wuwpma:0307011
Note: Type of Document - pdf; prepared on IBM PC; pages: 13 ; figures: included/request from author/draw your own
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