2006/03/01 by Fabrizio Coricelli, Alex Cukierman, Alberto Dalmazzo
Economics, Econometrics and Finance · #Banking stability, regulation, efficiency #Economic Theory and Policy #Monetary Policy and Economic Impact
paper · doi:10.1111/j.1467-9442.2006.00441.x
openalex publication_date 2006/03/01 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/25
Abstract 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 about the effects of central bank conservativeness. We evaluate the relative merits of those conflicting views by developing a unified framework. We find that: (i) the effect of conservativeness on employment depends on unions’ relative aversion to unemployment versus inflation, and (ii) for plausible values of this relative aversion (and more than one union), social welfare is maximized under a highly conservative central bank. We also evaluate the effects of centralization of wage bargaining and product market competition on unemployment and inflation.