unemployment is primarily caused by labour market rigidities, i.e. social institutions and regulations which prevent “market …The paper questions the predominant view on unemployment and wages in the European Un-ion according to which high … decades, no strictly inverse relationship between real wage growth and unemployment can be found. On the contrary …

affecting UK labour market conditions. When the real exchange rate is undervalued, short-run unemployment falls as firms respond … to an improvement in domestic competitiveness by increasing their demand for labour. The unemployment response to the … reflects monetary policy considerations, our results imply that unemployment can be targeted by economic policy. Our results …

unemployment vary both with large versus small real exchange rate disequilibria and rising versus falling unemployment regimes. The … adjustment in periods of falling unemployment. This implies that prices and wages are more flexible when real output is high … demanding and getting higher wages. Unemployment is reduced following gains in competitiveness when the real exchange rate is …