The nonneutrality of monetary policy with large price or wage setters
Publication
, Journal Article
Soskice, D; Iversen, T
Published in: Quarterly Journal of Economics
January 1, 2000
Monetary rules matter for the equilibrium rate of employment when the number of price-wage setters is small, even when assuming rational expectations, complete information, central bank precommitment, and absence of nominal rigidities. If the central bank is nonaccommodating, sufficiently large unions, bargaining independently, have an incentive to moderate sectoral money wages, and thereby expected real wages. The result is an increase in the real money supply, and hence higher demand and employment. This does not hold with accommodating monetary policy since unions' wage decisions cannot then affect the real money supply. A similar argument holds for large monopolistically competitive price setters. © Oxford University Press 2001.
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Quarterly Journal of Economics
DOI
ISSN
0033-5533
Publication Date
January 1, 2000
Volume
115
Issue
1
Start / End Page
265 / 284
Related Subject Headings
- Economics
- 3803 Economic theory
- 3802 Econometrics
- 3801 Applied economics
- 14 Economics
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Soskice, D., & Iversen, T. (2000). The nonneutrality of monetary policy with large price or wage setters. Quarterly Journal of Economics, 115(1), 265–284. https://doi.org/10.1162/003355300554737
Soskice, D., and T. Iversen. “The nonneutrality of monetary policy with large price or wage setters.” Quarterly Journal of Economics 115, no. 1 (January 1, 2000): 265–84. https://doi.org/10.1162/003355300554737.
Soskice D, Iversen T. The nonneutrality of monetary policy with large price or wage setters. Quarterly Journal of Economics. 2000 Jan 1;115(1):265–84.
Soskice, D., and T. Iversen. “The nonneutrality of monetary policy with large price or wage setters.” Quarterly Journal of Economics, vol. 115, no. 1, Jan. 2000, pp. 265–84. Scopus, doi:10.1162/003355300554737.
Soskice D, Iversen T. The nonneutrality of monetary policy with large price or wage setters. Quarterly Journal of Economics. 2000 Jan 1;115(1):265–284.
Published In
Quarterly Journal of Economics
DOI
ISSN
0033-5533
Publication Date
January 1, 2000
Volume
115
Issue
1
Start / End Page
265 / 284
Related Subject Headings
- Economics
- 3803 Economic theory
- 3802 Econometrics
- 3801 Applied economics
- 14 Economics