Wage-setting under Different Monetary Regimes
In an economy with large wage-setters (like industry unions), the monetary regime affects the trade-off between consumer real wages and employment and profits faced by the wage-setters. This paper shows that an exchange rate target, including participation in a monetary union, is likely to involve lower wages in the traded sector, and higher wages in the non-traded sector, than does a price target. An exchange rate target also involves higher prices on non-traded goods relative to on traded goods. Overall welfare is likely to be higher under a price target. Copyright The London School of Economics and Political Science 2003.
Year of publication: |
2003
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Authors: | Holden, Steinar |
Published in: |
Economica. - London School of Economics (LSE). - Vol. 70.2003, 278, p. 251-265
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Publisher: |
London School of Economics (LSE) |
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