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| Tekijä: | Fahr, S. Smets, F. |
| Otsikko: | Downward wage rigidities and optimal monetary policy in a monetary union |
| Lehti: | Scandinavian Journal of Economics
2010 : VOL. 112:4 p. 812-840 |
| Asiasana: | inflation macroeconomics pay monetary system competitiveness productivity |
| Kieli: | eng |
| Tiivistelmä: | This paper analyzes the implications of heterogeneity in the type of downward wage rigidity (nominal or real) for optimal monetary policy in a monetary union with asymmetric wage adjustment costs. Indexation in one region of the union reduces optimal grease inflation in the presence of common productivity shocks. Large common shocks might have large and persistent effects on the intra-union terms of trade, whereby the region characterized by downward real wage rigidity adjusts with a persistent loss of competitiveness. In response to asymmetric productivity shocks, there is no role for grease inflation since relative price changes facilitating the real wage changes dominate the adjustment mechanism. |
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