EconPapers    
Economics at your fingertips  
 

Monetary Policy and Nominal Rigidities under Low Inflation

Steinar Holden ()

No 481, CESifo Working Paper Series from CESifo Group Munich

Abstract: In most European countries, money wages are given in collective agreements or individual employment contracts, and the employer cannot unilaterally cut wages, even after the expiration of a collective agreement. Ceteris paribus, workers have a stronger bargaining position when they try to prevent a cut in money wages. If inflation is so low that some money wages have to be cut, workers‘ stronger bargaining position requires higher unemployment in equilibrium. However, inflation is more stable when money wage rigidity binds, providing an incentive for monetary policy makers to choose a low target for inflation, which is easier to fulfil.

Keywords: Nominal wage rigidity; labour contracts; monetary policy; inflation; equilibrium unemployment (search for similar items in EconPapers)
Date: 2001
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7) Track citations by RSS feed

Downloads: (external link)
https://www.ifo.de/DocDL/cesifo_wp481.pdf (application/pdf)

Related works:
Working Paper: Monetary policy and nominal rigidities under low inflation (2001) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_481

Access Statistics for this paper

More papers in CESifo Working Paper Series from CESifo Group Munich Contact information at EDIRC.
Bibliographic data for series maintained by Klaus Wohlrabe ().

 
Page updated 2020-05-24
Handle: RePEc:ces:ceswps:_481