Das Stagflationsproblem und Europa

Ekkehart Schlicht

Munich Reprints in Economics from University of Munich, Department of Economics

Abstract: This note, published in 1995, assesses the problems that might be entailed by the introduction of the European monetary union. It is argued that wage pressure will not be diminished by forming the union, and the stagflation problem that lies at the root of the rising trend in unemployment will persist. As exchange rates cannot serve to compensate different wage developments in the monetary union, imbalances will result, and subsidization less competitive member states will be necessary. An indexation of wage settlements is proposed that, similar to exchange rates, permits to compensate divergent developments in wage rates across member states while maintaining the monetary union.

Keywords: inflation unemployment; stagflation; indexation; wage indexation; European monetary union; efficiency wages (search for similar items in EconPapers)
JEL-codes: E24 E31 F16 J58 (search for similar items in EconPapers)
Date: 1995
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Published in Schriften des Info-Teams Landesverteidigung (1995): pp. 77-80

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