Wages and prices in Europe before and after the onset of the Monetary Union

Riccardo Girardi and Paolo Paruolo

Economic Modelling, 2013, vol. 35, issue C, 643-653

Abstract: This paper investigates possible structural changes induced by the Euro on the relations among wages, prices and unemployment for the five major European economies. The dynamic adjustment and the level relations are found to be different across subperiods as well as across countries. During the European Economic and Monetary Union (EMU) period, there is evidence of a conventionally-sloped Phillips Curve for the four economies within the EMU, with a higher degree of homogeneity with respect to the pre-EMU period; the UK presents instead a positively-sloped Phillips Curve in the EMU period. In this latter period, deviations from reference values are found to influence unemployment for all countries, including the UK. Only for Germany and Spain, instead, we find evidence that deviations from reference values influence inflation dynamics.

Keywords: Phillips Curve; Wages; Prices; Unemployment; Inflation; Cointegration (search for similar items in EconPapers)
JEL-codes: E24 E31 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Working Paper: Wages and prices in Europe before and after the onset of the Monetary Union (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:35:y:2013:i:c:p:643-653

DOI: 10.1016/j.econmod.2013.08.009

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