Seminar Papers, Institute for International Economic Studies, Stockholm University
Monetary Union and Precautionary Labour-Market Reform
Abstract: The paper demonstrates that policy makers have a
precautionary motive to undertake more labour-market reform - and hence
attain lower equilibrium unemployment - inside a monetary union than
outside. The reason is a desire to reduce the utility cost of variations in
employment when asymmetric shocks can no longer be stabilised through
domestic monetary policy.
Keywords: Monetary Union; Asymmetric Shocks; Stabilisation policy; Labour-Market Reform; Equilibrium Unemployment; (follow links to similar papers)
JEL-Codes: E58; E69; F33; J29; J30; (follow links to similar papers)
16 pages, November 1, 1998
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