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Employment and Wage Bargaining in an Open Monetary Union
Author(s) -
Cahuc Pierre,
Kempf Hubert
Publication year - 1997
Publication title -
review of international economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.513
H-Index - 58
eISSN - 1467-9396
pISSN - 0965-7576
DOI - 10.1111/1467-9396.5.4s.6
Subject(s) - economics , openness to experience , wage bargaining , wage , externality , unemployment , index (typography) , open economy , labour economics , monetary economics , international economics , macroeconomics , microeconomics , exchange rate , psychology , social psychology , world wide web , computer science
This paper studies alternative patterns of wage bargaining in an open two‐country monetary union. Wages are fixed by trade unions for two periods, either at the national or at the monetary union level. It is shown that the best solution with regard to unemployment depends on the nature of externalities and dynamic strategic interactions between the monetary union’s countries; namely on the degree of openness of the monetary union, and the differentiation index between national goods.