Labor Market Regimes and the Effects of Monetary Policy

  title={Labor Market Regimes and the Effects of Monetary Policy},
  author={Douglas A. Hibbs and Nicola Acocella and Giovanni Di Bartolomeo},
  journal={ERN: Monetary Policy Objectives; Policy Designs; Policy Coordination (Topic)},
In this paper we use a standard multi-union, monopolistic competition model to evaluate analytically and numerically the effects of monetary policy on inflation and unemployment under different institutional arrangements in the labor market that are defined by the rigidity of nominal wages. We show that the effects of monetary policy on the real economy depend critically on the wage formation regime, and on the ways in which the restrictiveness of policy interacts with product price competition… 
Trend inflation as a workers’ discipline device
The paper shows that a monetary policy regime that allows for a positive inflation rate disciplines monopolistic wages setters if these, when setting contracts, internalize the consequences of their
Unions, Monopolistic Competition and the Optimal Monetary Regime
This paper considers the optimal monetary regime in a monopolistically competitive economy where wages are set by non-atomistic (i.e. large) unions. In such a context, the conduct of monetary policy
Labour Market and Monetary Policy in South Africa
This paper analyses the in‡fluence of the South African labour market on the conduct of monetary policy. Because of the weak response of wages to changes in employment, the South African Reserve
Monetary strictness and labour market outcomes under incomplete transparency
This paper extends the workhorse model of strategic wage setting and monetary policy to the case of incomplete central bank transparency. In contrast with the existing literature, the paper shows
Labor Market Imperfections, Real Wage Rigidities and Financial Shocks
By using the recent Gertler and Kiyotaki.s (2010) setup, this paper explores the interaction between real distortions stemming from the labor market institutions and financial shocks. We find that
Monetary Discipline as a Substitute for Fiscal Reforms and Market Liberalisations
type="main" xml:lang="en"> In an economy with wage-setting unions where the government has gains from redistribution, we analyse the incentive of incumbent politicians to implement monetary
Wage Rigidity, Collective Bargaining and the Minimum Wage: Evidence from French Agreement Data
Using several unique data sets on wage agreements at both industry and firm levels in France, we document stylized facts on wage stickiness and the impact of wage-setting institutions on wage
Trend inflation as a workers disciplining device in a general equilibrium model
In New Keynesian models nominal rigidities determine socially inefficient outcomes. Our paper reverses this view: properly designed monetary policies may take advantage of predetermined nominal wages
The issue of instability in a simple policy game between the central bank and a representative union
In the recent economic literature the independence of the central bank is often considered to be one of the most effective guarantees to achieve price stability. A strong theoretical basis for this
Wage Rigidity, Collective Bargaining, and the Minimum Wage: Evidence from French Agreement Data
Abstract Using data sets on wage agreements at both industry and firm levels in France, we document stylized facts on wage stickiness. The average duration of wages is a little less than one year,


The interaction of monetary policy and wages
This paper focuses on the interaction of monetary policy and wage formation in economies with strong labor unions. Government and unions are viewed as endogenous utility maximizers and the
Labour Markets and Monetary Union: A Strategic Analysis
This paper shows that the effects of a monetary union depend on several labour market features. In particular, the switch from national monetary policies to a common monetary policy usually affects
Monetary Institutions, Monopolistic Competition, Unionized Labor Markets and Economic Performance
Recent literature on the interactions between labor unions and monetary institutions features either a supply or a demand channel of monetary policy, but not both. This leads to two opposing views
Economic Performance and Stabilization Policy in a Monetary Union with Imperfect Labour and Goods Markets
This paper develops a framework for the analysis of the eects of institutions on economic performance in a monetary union in the presence of stabilization policy,unionized labor markets and
Stabilisation, Policy Targets and Unemployment in Imperfectly Competitive Economies
This paper argues that the rate of equilibrium unemployment depends on the objectives of the central bank. In a model where the central bank uses monetary policy to stabilize the economy, the authors
The Nonneutrality of Monetary Policy with Large Price or Wage Setters
Monetary rules matter for the equilibrium rate of employment when the number of price-wage setters is small, even when assuming rational expectations, complete information, central bank
Strategic Monetary Policy with Non-Atomistic Wage Setters
The literature on monetary policy games establishes that policy makers' attempts to boost employment above the 'natural' rate are futile and result in an inflationary bias when wage setters have
Socially Optimal Monetary Policy Institutions
Research on the interaction between wage setters and central banks has shown that the classical dichotomy of previous termmonetary policynext term models in the tradition of Barro and Gordon [Journal
Monetary Institutions, Monetary Union and Unionized Labor Markets - Some Recent Developments ∗
This paper is a selective survey of recent developments regarding the strategic interaction between labor unions and the monetary authority. Since Rogoff (1985) influential work a basic tenet of the
Monetary Regimes and the Coordination of Wage Setting
Abstract A recent literature argues that a strict monetary regime may reduce equilibrium unemployment by disciplining wage setters, as wage setters abstain from raising wages to avoid a monetary