2006/01/01 by Nicola Acocella, Giovanni Di Bartolomeo, Douglas A. Hibbs +1 · 1 citation
Economics, Econometrics and Finance · #Banking stability, regulation, efficiency #Competition (biology) #Economic Theory and Policy #Economic theories and models #Economics #Efficiency wage #Global Financial Crisis and Policies #Inflation (cosmology) #Inflation targeting #Labour economics #Macroeconomics #Market economy #Monetary Policy and Economic Impact #Monetary economics #Monetary policy #Monopolistic competition #Monopoly #Product market #Real wages #Restrictiveness #Unemployment #Wage
paper · doi:10.1016/j.jmacro.2006.08.006
openalex publication_date 2006/01/01 · openalex created_date 2025/10/10 · openalex updated_date 2026/08/01
In this paper we use a standard multi-union, monopolistic competition model to evaluate\nanalytically and numerically the effects of monetary policy on inflation and unemployment under different institutional arrangements in the labor market that are defined by the rigidity of nominal wages. We show that the effects of monetary policy on the real economy depend critically on the wage formation regime, and on the ways in which the restrictiveness of policy interacts with product price competition, wage setting centralization and the utility weight unions place on real wage premiums as compared to unemployment. Our interpretation of the results emphasizes how the posture of monetary policy toward inflation influences the strategic calculations driving unions’ wage setting behavior in different institutional environments.