Coordination of Wage Bargaining, Exchange Rate Stability and External Adjustment

18 Pages Posted: 14 Sep 2016

See all articles by Mika Nieminen

Mika Nieminen

University of Jyväskylä - School of Business and Economics

Kari Heimonen

University of Jyväskylä - School of Business and Economics

Timo Tohmo

University of Jyväskylä - School of Business and Economics

Date Written: June 10, 2016

Abstract

The literature on the determinants of the rate of current account reversion has been limited to examining the role of exchange rate regimes. We propose that the degree of coordination of wage bargaining affects the speed of current account adjustment. Our point estimates are economically and statistically significant, suggesting that fragmented firm-level wage bargaining facilitates external adjustment. We also find a strong negative interaction between the effects of coordination of wage bargaining and exchange rate stability on the rate of current account reversion.

Keywords: Current account dynamics, Coordination wage bargaining

JEL Classification: F32, F41

Suggested Citation

Nieminen, Mika and Heimonen, Kari and Tohmo, Timo, Coordination of Wage Bargaining, Exchange Rate Stability and External Adjustment (June 10, 2016). Available at SSRN: https://ssrn.com/abstract=2838181 or http://dx.doi.org/10.2139/ssrn.2838181

Mika Nieminen (Contact Author)

University of Jyväskylä - School of Business and Economics ( email )

University of Jyväskylä
PO Box 35
FIN 40351, FIN-40014
Finland

Kari Heimonen

University of Jyväskylä - School of Business and Economics ( email )

University of Jyväskylä
PO Box 35
FIN 40351, FIN-40014
Finland

Timo Tohmo

University of Jyväskylä - School of Business and Economics ( email )

University of Jyväskylä
PO Box 35
FIN 40351, FIN-40014
Finland

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