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  • School of Business, Economics and Law / Handelshögskolan
  • Department of Economics / Institutionen för nationalekonomi med statistik
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  • Redigera dokument
  •   Startsida
  • School of Business, Economics and Law / Handelshögskolan
  • Department of Economics / Institutionen för nationalekonomi med statistik
  • Working papers
  • Redigera dokument
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Nominal Wage Flexibility in a Monetary Union

Sammanfattning
Membership in a monetary union reduces the possibilities to counteract fluctuations in productivity by monetary policy. One condition for entrance not to lead to adverse unemployment performance is that wages are flexible with respect to productivity. Here I show that, depending on workers' risk aversion, the incentive for workers to choose more nominal wages flexibility may increase after entrance in a monetary union. The reason is that if nominal wages are fixed in long-term contracts, the abolishment of exchange rates decreases the risk in real wages. On the other hand, the common monetary policy increases the employment risk. Assuming that individuals' preferences do not change, the institutional change in monetary policy may increase wage flexibility in a monetary union.
Universitet
Göteborg University. School of Business, Economics and Law
URL:
http://hdl.handle.net/2077/2862
Samlingar
  • Working papers
Fil(er)
gunwpe0080.pdf (280.8Kb)
Datum
2002
Författare
Erlandsson, Mattias
Nyckelord
New open-economy macroeconomics; Nominal wage flexibility;Optimal wage setting
Monetary unification
Publikationstyp
Report
ISSN
1403-2465
Serie/rapportnr.
Working Papers in Economics, nr 80
Språk
en
Metadata
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