Has EMU had any Impact on the Degree of Wage Restraint?

Adam Posen and Daniel Popov Gould

No 1783, CESifo Working Paper Series from CESifo

Abstract: We find in cross-sectional investigations that wage restraint is either unchanged or increased following EMU in the vast majority of countries. This contradicts the predictions of a widely-cited family of models of labor market bargaining. In those, Germany would have been expected to display the greatest decline in wage restraint post-EMU, and we find no indication of such a decline. The time-series evidence on Italy shows a significant increase in wage restraint after eurozone entry. This pattern is consistent with the models that emphasise the gains from monetary credibility. The eurozone increase in wage restraint is matched by the increase seen in the UK and Sweden after adopting inflation targeting, another means to credibility.

Keywords: EMU; wage bargaining; monetary credibility; productivity (search for similar items in EconPapers)
Date: 2006
New Economics Papers: this item is included in nep-cba, nep-eec, nep-lab and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

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Related works:
Chapter: Has EMU Had Any Impact on the Degree of Wage Restraint? (2007)
Working Paper: Has EMU Had Any Impact on the Degree of Wage Restraint? (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_1783

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