Inflation and unemployment, new insights during the EMU accession

Jean-Louis Combes and Pierre Lesuisse ()
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Pierre Lesuisse: BETA - Bureau d'Économie Théorique et Appliquée - AgroParisTech - UNISTRA - Université de Strasbourg - Université de Haute-Alsace (UHA) - Université de Haute-Alsace (UHA) Mulhouse - Colmar - UL - Université de Lorraine - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement

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Abstract: In the process of EU integration, toward the Eurozone (EA) accession, we try to understand, how changes in exchange rate regimes, attributed to the switch through the ERM-II and to the EA accession, influence the dynamic between inflation and unemployment, that is, swings on the Phillips curve coefficient. We look at a panel of EA countries, before and after their EA entry, over the last twenty years, using a recent work from McLeay and Tenreyro (2020), to clarify the impact of losing the monetary autonomy. Accession to the Eurozone leads to a non-significant inflation/unemployment relationship. We link this result to the fact that the small economies of the Eurozone do not have sufficient weight to influence the single monetary policy. This is corroborated by the fact that within the Eurozone, what we call the "economic leaders" maintain a significant trade-off between inflation and unemployment.

Keywords: Phillips curve; European monetary union; Panel (search for similar items in EconPapers)
Date: 2022-12
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Citations: View citations in EconPapers (1)

Published in International Economics, 2022, 172, pp.124-142. ⟨10.1016/j.inteco.2022.09.004⟩

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Journal Article: Inflation and unemployment, new insights during the EMU accession (2022)
Journal Article: Inflation and unemployment, new insights during the EMU accession (2022)
Working Paper: Inflation and Unemployment, new insights during the EMU accession (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-03790350

DOI: 10.1016/j.inteco.2022.09.004

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