Unions’ Coordination and the Central Banker’s behavior in a Monetary Union

Patrice Borda (), Damien Gaumont and Olivier Manioc

MPRA Paper from University Library of Munich, Germany

Abstract: In a 2-country monetary union, this paper studies a Stackelberg game be- tween the Central Banker and two symmetrical countries. The central banker chooses the money supply. In each country, there is a union who acts as a monopoly of labor supply. Firms are wage and price takers. We analyze the effects of internationally coordinated unions versus internationally uncoor-dinated unions. It is shown that wages are lower when unions are interna- tionally coordinated and the money policy is more accomodating. This result is linked to the degree of conservatism of the Central Banker with respect to inflation.1

Keywords: Monetary Union; International Union Coodination; Employment and Wage-Setting. (search for similar items in EconPapers)
JEL-codes: E5 E52 J5 J51 (search for similar items in EconPapers)
Date: 2011-03-06
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:50293

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