Monetary Policy Effects in Developing Countries with Minimum Wages

Kodama Masahiro

No 142, IDE Discussion Papers from Institute of Developing Economies, Japan External Trade Organization(JETRO)

Abstract: Using a Dynamic General Equilibrium (DGE) model, this study examines the effects of monetary policy in economies where minimum wages are bound. The findings show that the monetary-policy effect on a binding-minimum-wage economy is relatively small and quite persistent. This result suggests that these two characteristics of monetary policy in the minimum-wage model are rather different from those in the union-negotiation model which is often assumed to account for industrial economies.

Keywords: Monetary policy; Sticky wage; Business cycles; Developing countries; Minimum wages; 金融政策; 硬直賃金; 景気; 発展途上国; 最低賃金 (search for similar items in EconPapers)
JEL-codes: E32 E52 J3 O11 (search for similar items in EconPapers)
Date: 2008-03-01
New Economics Papers: this item is included in nep-cba, nep-dge, nep-lab, nep-mac, nep-mon and nep-opm
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Published in IDE Discussion Paper = IDE Discussion Paper, No. 142. 2008-03-01

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