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The Welfare Effect of Foreign Monetary Conservatism with Nonatomistic Wage Setters

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  • VINCENZO CUCINIELLO

Abstract

This paper extends the closed‐economy analysis of strategic interaction between labor unions and the monetary authority in Lippi (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 policymakers—entails wage moderation. The impact of domestic central bank conservatism hinges instead on the combination of three strategic effects.

Suggested Citation

  • Vincenzo Cuciniello, 2011. "The Welfare Effect of Foreign Monetary Conservatism with Nonatomistic Wage Setters," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 43(8), pages 1719-1734, December.
    • Handle: RePEc:wly:jmoncb:v:43:y:2011:i:8:p:1719-1734
    DOI: 10.1111/j.1538-4616.2011.00465.x
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    Cited by:

    1. Vincenzo Cuciniello & Federico M. Signoretti, 2015. "Large Banks, Loan Rate Markup, and Monetary Policy," International Journal of Central Banking, International Journal of Central Banking, vol. 11(3), pages 141-177, June.
    2. Giovanni Di Bartolomeo, 2014. "Optimal Degree of Union Centralization," Studies in Microeconomics, , vol. 2(2), pages 201-211, December.
    3. Emiliano Brancaccio & Nadia Garbellini, 2015. "Currency regime crises, real wages, functional income distribution and production," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 12(3), pages 255-276, December.
    4. Cuciniello, Vincenzo, 2013. "Large labour unions and terms-of-trade externality," Economics Letters, Elsevier, vol. 120(1), pages 135-138.
    5. Cuciniello, Vincenzo & Lambertini, Luisa, 2016. "Optimal exchange rate flexibility with large labor unions," Journal of International Money and Finance, Elsevier, vol. 63(C), pages 112-136.
    6. Chrysanthopoulou, Xakousti, 2021. "Banks’ internalization effect and equilibrium," MPRA Paper 109275, University Library of Munich, Germany.

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    More about this item

    JEL classification:

    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects

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