Nominal Wage Flexibility, Wage Indexation and Monetary Union
2002 (English)Report (Other academic)
Membership in a monetary union (EMU) is likely to imply stronger incentives for nominal wage flexibility in the form of wage indexation and shorter contract length than non-membership. For example, EMU entry may cause a move from non-indexation to an indexation equilibrium. But more wage flexibility is only an imperfect substitute for an own monetary policy. It is possible that an increase in wage flexibility is welfare-decreasing, because of the accompanying rise in price variability. If indexation occurs outside the EMU, wither multiple equilibria or full-indexation equilibria may occur.
Place, publisher, year, edition, pages
Stockholm: IIES , 2002. , 33 p.
Seminar Paper / Institute for International Economic Studies, Stockholm University. (Online), ISSN 1653-610X ; 716
nominal wage flexibility, wage indexation, EMU, asymmetric shocks
IdentifiersURN: urn:nbn:se:su:diva-42047OAI: oai:DiVA.org:su-42047DiVA: diva2:343786