Monetary policy and the racial wage gap

Wage Indexation and Monetary Policy∗

This paper analyzes the impact of indexed wage contracts on inflation and social welfare in a Barro–Gordon model with state contingent monetary policy. Wage indexation reduces the inflation bias but may raise the variance of inflation rates. In social optimum wages are fully indexed to the price level, but this requires optimal wage adjustments to productivity shocks. If wage adjustments to pro...

Non-Atomistic Wage Setters and Monetary Policy

The purpose of the paper is to study the monetary policy implications of unionized labor markets in a New Keynesian framework. It is shown that, once the presence of large wage setters is taken into account, the degree of wage setting centralization and the aggressiveness of the central bank in stabilizing inflation jointly affect the equilibrium level of real economic activity in the long-run....

The Output Gap and Optimal Monetary Policy

In a standard New Keynesian model, a discretionary and myopic central bank concerned with changes in the output gap and inßation will implement a monetary policy that replicates the optimal, timeless perspective, precommitment policy. By stabilizing output gap changes, the central bank imparts inertia into output and inßation that is absent under pure discretion. It is shown that even a fully o...

Institutional Dimensions of Coordinating Wage-Bargaining and Monetary Policy

Monetary union enlargement, scal policy and strategic wage setting

This contribution develops a framework for studying the e ects of the enlargement of a monetary union on macroeconomic performances in the presence of strategic interactions between non atomistic labour unions, monetary and scal authorities. We show that the extension of the monetary union to new identical member countries may have bene cial e ects, depending on the scal policymaking parameters...