Monetary Union and Precautionary Labor-Market Reform
CES Working Paper at University of Munich No. 174
Posted: 8 Apr 1999
Date Written: November 1998
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: Suggested Citation