Monetary Regime and the Co-Ordination of Wage Setting

35 Pages Posted: 23 Apr 2000

See all articles by Steinar Holden

Steinar Holden

University of Oslo - Department of Economics; Norges Bank; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: February 2000

Abstract

International comparisons show that countries with co-ordinated wage setting generally have lower unemployment than countries with less co-ordinated wage setting. This paper argues that the monetary regime may affect whether co-ordination among many wage setters is feasible. A strict monetary regime, like a country-specific inflation target, to some extent disciplines wage setters, so that the consequences of uncoordinated wage setting are less detrimental than under a more passive monetary regime (eg a monetary union). Thus, the gains from co-ordination are larger under a passive regime. Under some circumstances a passive regime may induce co-operation in wage setting, and thus lower unemployment, when a stricter regime would not.

JEL Classification: E24, E52, J5

Suggested Citation

Holden, Steinar, Monetary Regime and the Co-Ordination of Wage Setting (February 2000). Available at SSRN: https://ssrn.com/abstract=218028 or http://dx.doi.org/10.2139/ssrn.218028

Steinar Holden (Contact Author)

University of Oslo - Department of Economics ( email )

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HOME PAGE: http://folk.uio.no/~sholden/

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CESifo (Center for Economic Studies and Ifo Institute)

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