Do wages contribute to flexibility and competitiveness in a monetary union?

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Title: Do wages contribute to flexibility and competitiveness in a monetary union?
Author: Juvonen, Petteri ; Obstbaum, Meri ; Vanhala, Juuso
Organization: Bank of Finland
Series: Bank of Finland. Bulletin
Series volume: 93
Series number: 3/2019
Year of publication: 2019
Publication date: 9.8.2019
Pages: 24
Subject (yso): kilpailukyky; palkat; sokki; sopeutuminen
Keywords: rahaliitto
Other keywords: adjustment; competitiveness; monetary union; shock; wages
Abstract: Wage-setting is a key macroeconomic mechanism for employment and economic growth, and in a member state of a monetary union, its importance is even greater. Wages largely determine how the economy responds to shocks, as individual members of a monetary union do not have the possibility of resolving the situation via the exchange rate or by adjusting the nominal interest rate. Prices and wages also determine the real exchange rate of countries in a monetary union and thus play a key role in the development of competitiveness.
Link: http://www.bofbulletin.fi/
Rights: https://helda.helsinki.fi/bof/copyright


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