Relative Wages in Monetary Union and Floating

Juhana Vartiainen
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Juhana Vartiainen: Trade Union Institute for Economic Research, Postal: Wallingatan 38, SE-111 24 Stockholm, Sweden

No 155, Working Paper Series from Trade Union Institute for Economic Research

Abstract: We analyse a small open economy with a tradable and a sheltered sector. If the unions that operate in each sector coordinate their wage demands sectorwise, the choice of monetary regime - floating cum inflation target vs EMU - may affect the relative wages and prices of the economy. We show that EMU results in lower prices for tradable goods and lower real wages in the traded sector while opposite results hold for sheltered sector prices and wages. Thus, if large unions behave strategically, the choice of monetary regime has far-reaching structural implications.

Keywords: Trade unions; Wage bargaining; EMU; Monetary policy (search for similar items in EconPapers)
JEL-codes: E24 J31 J42 (search for similar items in EconPapers)
Pages: 20 pages
Date: 1999-11-04
New Economics Papers: this item is included in nep-ifn and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Published in Scandinavian Journal of Economics, 2002, pages 277-287.

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Persistent link: https://EconPapers.repec.org/RePEc:hhs:fiefwp:0155

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