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Monetary policy and wage bargaining in the EMU: restrictive ECB policies, high unemployment, nominal wage restraint and rising inflation
[working paper]
Corporate Editor
Wirtschafts- und Sozialwissenschaftliches Institut in der Hans-Böckler-Stiftung
Abstract "Assessing the effects of monetary policy and wage bargaining on employment and inflation in
the European Monetary Union (EMU), in the first step a Post-Keynesian competitive claims
model of inflation with endogenous money is developed. In this model the NAIRU is
considered to be a short-run limit t... view more
"Assessing the effects of monetary policy and wage bargaining on employment and inflation in
the European Monetary Union (EMU), in the first step a Post-Keynesian competitive claims
model of inflation with endogenous money is developed. In this model the NAIRU is
considered to be a short-run limit to employment enforced by independent and conservative
central banks. In the long run, however, the NAIRU will follow actual unemployment and is
therefore also dependent on the forces determining aggregate demand, including monetary
policies. But the NAIRU may also be reduced by effectively co-ordinated wage bargaining as
has been shown by institutional political economists. Applying these considerations to the
economic performance of the EMU, different scenarios determined by wage bargaining coordination
and the European Central Bank's (ECB) monetary policies are developed. It is
shown that the first phase of EMU was dominated by uncoordinated wage bargaining across
EMU and an "anti-growth-bias" of the ECB. Therefore, the Euro area was plagued with
nominal wage restraint, high unemployment and rising inflation. Economic performance will
improve if the ECB abandons its asymmetric monetary strategy. This may be facilitated by a
higher degree of effective wage bargaining co-ordination across EMU." (author's abstract)... view less
Keywords
EU; monetary union; wage; effect on employment; economic policy; European Central Bank; monetary policy; inflation; collective bargaining; unemployment
Classification
European Politics
Economic Policy
Free Keywords
European Monetary Union; monetary policy; wage bargaining; inflation and employment
Document language
English
Publication Year
2002
City
Düsseldorf
Page/Pages
32 p.
Series
WSI-Diskussionspapier, 103
Licence
Deposit Licence - No Redistribution, No Modifications
Data providerThis metadata entry was indexed by the Special Subject Collection Social Sciences, USB Cologne