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Monetary Union Enlargement, Fiscal Policy, and Strategic Wage Setting *
Author(s) -
Sidiropoulos Moïse,
Zimmer Blandine
Publication year - 2009
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/j.1467-9396.2009.00838.x
Subject(s) - economics , resizing , wage , fiscal policy , fiscal union , monetary policy , international economics , monetary economics , macroeconomics , european union , labour economics
This contribution develops a framework for studying the effects of the enlargement of a monetary union on macroeconomic performances in the presence of strategic interactions between non‐atomistic labor unions, monetary, and fiscal authorities. We show that the integration of new identical member countries may have beneficial effects, depending on the fiscal policymaking structure. Qualifications to this result are provided under cross‐country asymmetries in the size of the economies, the structure of the labor markets, and the fiscal authorities' preferences.