This paper develops a model that shows how training costs incurred by firms alters the relationship between wage inflation and unemployment. During an upswing, firms will take on and train new workers. These workers are, however, not shed during a following downswing. This is due to the lump sum...

By using a model of trade union behaviour Grüner (2010) argues that the introduction of the European Monetary Union (EMU) led to lower wage growth and lower unemployment in participating countries. Following Grüner's model, monetary centralization lets the central bank react less flexibly to...