Monetary Union and Precautionary Labor-Market Reform

CES Working Paper at University of Munich No. 174

Posted: 8 Apr 1999

See all articles by Lars Calmfors

Lars Calmfors

Research Institute of Industrial Economics; IIES

Date Written: November 1998

Abstract

The paper demonstrates that policy makers may have a precautionary motive to undertake more labor-market reform--and hence attain lower equilibrium unemployment--inside a monetary union than outside. The reason is a desire to reduce the utility cost of variations in employment when asymmetric shocks can no longer be stabilized through domestic monetary policy.

JEL Classification: E58, E69, F33, J29, J30

Suggested Citation

Calmfors, Lars, Monetary Union and Precautionary Labor-Market Reform (November 1998). CES Working Paper at University of Munich No. 174, Available at SSRN: https://ssrn.com/abstract=148475

Lars Calmfors (Contact Author)

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