Wage‐Setting and Inflation Targets in EMU
Although the operation of national coordinated wage‐bargaining systems in EMU has produced low inflation rates, EMU‐wide inflation has been above the ECB target rate for the last 3 years. By contrast, under the ERM, inflation rates declined steadily after 1992 to below 2 per cent in both the last 2...
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| Veröffentlicht in: | Oxford review of economic policy 2003-04, Vol.19 (1), p.149-160 |
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| creator | Hancké, Bob Soskice, David |
| description | Although the operation of national coordinated wage‐bargaining systems in EMU has produced low inflation rates, EMU‐wide inflation has been above the ECB target rate for the last 3 years. By contrast, under the ERM, inflation rates declined steadily after 1992 to below 2 per cent in both the last 2 years of the regime. It is argued that this was the consequence of two low‐inflation incentives under ERM: (i) the Maastricht inflation condition for EMU entry; and (ii) the combination of the Bundesbank threat to raise interest rates if German wage and price inflation rose above acceptable limits, linked to the need for other ERM members to follow low German inflation to stay within the exchange‐rate bands. These incentives no longer operate under EMU, where individual economies do not have an incentive to contribute to low EMU‐wide inflation. We suggest that inflation coordination between the large EMU member states might contribute to a solution while permitting the continuation of real exchange‐rate adjustments of smaller economies. |
| doi_str_mv | 10.1093/oxrep/19.1.149 |
| format | Article |
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We suggest that inflation coordination between the large EMU member states might contribute to a solution while permitting the continuation of real exchange‐rate adjustments of smaller economies.</description><subject>Aggregate demand</subject><subject>Bundesbank</subject><subject>Central banks</subject><subject>Collective bargaining</subject><subject>Contract negotiations</subject><subject>Economic and Monetary Union</subject><subject>Economic conditions</subject><subject>Economic inflation</subject><subject>Economic models</subject><subject>Economic policy</subject><subject>Economic theory</subject><subject>Employers</subject><subject>Employment</subject><subject>Euro</subject><subject>Europe</subject><subject>European Monetary Union</subject><subject>European Union</subject><subject>Exchange Rate Mechanism</subject><subject>Foreign exchange rates</subject><subject>Incentive pay</subject><subject>Incentives</subject><subject>Inflation</subject><subject>Inflation rate</subject><subject>Inflation rates</subject><subject>Interest rates</subject><subject>Labor unions</subject><subject>Low inflation</subject><subject>Monetary policy</subject><subject>Policy studies</subject><subject>Real wages</subject><subject>Studies</subject><subject>Wage negotiations</subject><subject>Wages</subject><subject>Wages & salaries</subject><issn>0266-903X</issn><issn>1460-2121</issn><issn>1460-2121</issn><fulltext>true</fulltext><rsrctype>article</rsrctype><creationdate>2003</creationdate><recordtype>article</recordtype><sourceid>7TQ</sourceid><recordid>eNp90E9LAkEYBvAhCjLr2i1YOkQQq-_83zmGWApWB5WkyzCrs7Kmuzazgt36CH3GPkmTGx46dJrD83tf3nkQOsfQwqBou9w6u25j1cItzNQBamAmICaY4EPUACJErIBOjtGJ9wsAIIzhBrp5NnP79fE5tFWVF_PIFLOoX2RLU-VlEY2Mm9vKR3kRdR_Gp-goM0tvz37fJhrfdUedXjx4uu93bgfxlHGoYmUJB5AUp5TIVDIyY9xImXIlIUs4I5Sls4RDimmKM0nUlLMUG2BWgDHc0Ca6qveuXfm2sb7Sq9xP7XJpCltuvKYJEzTBEOD1vzAQLiRlVAZ6-Ycuyo0rwjc0AaKoSAQLqFWjqSu9dzbTa5evjHsPm_RPx3rXscZKYx06DgMX9cDCV6Xba0IFCLXL4zrPfWW3-9y4Vx3uklz3Ji-aqwQeRW-oBf0GLJmF3Q</recordid><startdate>20030401</startdate><enddate>20030401</enddate><creator>Hancké, Bob</creator><creator>Soskice, David</creator><general>Oxford University Press</general><general>Oxford Publishing Limited (England)</general><scope>BSCLL</scope><scope>AAYXX</scope><scope>CITATION</scope><scope>7TQ</scope><scope>8BJ</scope><scope>DHY</scope><scope>DON</scope><scope>FQK</scope><scope>JBE</scope><scope>C18</scope></search><sort><creationdate>20030401</creationdate><title>Wage‐Setting and Inflation Targets in EMU</title><author>Hancké, Bob ; Soskice, David</author></sort><facets><frbrtype>5</frbrtype><frbrgroupid>cdi_FETCH-LOGICAL-c450t-9e2500731b327b742d45a77b5970f854234bd850b13b1f729c54b1a04e60aa5a3</frbrgroupid><rsrctype>articles</rsrctype><prefilter>articles</prefilter><language>eng</language><creationdate>2003</creationdate><topic>Aggregate demand</topic><topic>Bundesbank</topic><topic>Central banks</topic><topic>Collective bargaining</topic><topic>Contract negotiations</topic><topic>Economic and Monetary Union</topic><topic>Economic conditions</topic><topic>Economic inflation</topic><topic>Economic models</topic><topic>Economic policy</topic><topic>Economic theory</topic><topic>Employers</topic><topic>Employment</topic><topic>Euro</topic><topic>Europe</topic><topic>European Monetary Union</topic><topic>European Union</topic><topic>Exchange Rate Mechanism</topic><topic>Foreign exchange rates</topic><topic>Incentive pay</topic><topic>Incentives</topic><topic>Inflation</topic><topic>Inflation rate</topic><topic>Inflation rates</topic><topic>Interest rates</topic><topic>Labor unions</topic><topic>Low inflation</topic><topic>Monetary policy</topic><topic>Policy studies</topic><topic>Real wages</topic><topic>Studies</topic><topic>Wage negotiations</topic><topic>Wages</topic><topic>Wages & salaries</topic><toplevel>peer_reviewed</toplevel><toplevel>online_resources</toplevel><creatorcontrib>Hancké, Bob</creatorcontrib><creatorcontrib>Soskice, David</creatorcontrib><collection>Istex</collection><collection>CrossRef</collection><collection>PAIS Index</collection><collection>International Bibliography of the Social Sciences (IBSS)</collection><collection>PAIS International</collection><collection>PAIS International (Ovid)</collection><collection>International Bibliography of the Social Sciences</collection><collection>International Bibliography of the Social Sciences</collection><collection>Humanities Index</collection><jtitle>Oxford review of economic policy</jtitle></facets><delivery><delcategory>Remote Search Resource</delcategory><fulltext>fulltext</fulltext></delivery><addata><au>Hancké, Bob</au><au>Soskice, David</au><format>journal</format><genre>article</genre><ristype>JOUR</ristype><atitle>Wage‐Setting and Inflation Targets in EMU</atitle><jtitle>Oxford review of economic policy</jtitle><addtitle>Oxf Rev Econ Policy</addtitle><date>2003-04-01</date><risdate>2003</risdate><volume>19</volume><issue>1</issue><spage>149</spage><epage>160</epage><pages>149-160</pages><issn>0266-903X</issn><issn>1460-2121</issn><eissn>1460-2121</eissn><abstract>Although the operation of national coordinated wage‐bargaining systems in EMU has produced low inflation rates, EMU‐wide inflation has been above the ECB target rate for the last 3 years. By contrast, under the ERM, inflation rates declined steadily after 1992 to below 2 per cent in both the last 2 years of the regime. It is argued that this was the consequence of two low‐inflation incentives under ERM: (i) the Maastricht inflation condition for EMU entry; and (ii) the combination of the Bundesbank threat to raise interest rates if German wage and price inflation rose above acceptable limits, linked to the need for other ERM members to follow low German inflation to stay within the exchange‐rate bands. These incentives no longer operate under EMU, where individual economies do not have an incentive to contribute to low EMU‐wide inflation. We suggest that inflation coordination between the large EMU member states might contribute to a solution while permitting the continuation of real exchange‐rate adjustments of smaller economies.</abstract><cop>Oxford</cop><pub>Oxford University Press</pub><doi>10.1093/oxrep/19.1.149</doi><tpages>12</tpages></addata></record> |
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| ispartof | Oxford review of economic policy, 2003-04, Vol.19 (1), p.149-160 |
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| language | eng |
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| source | PAIS Index; JSTOR Archive Collection A-Z Listing; Oxford University Press Journals All Titles (1996-Current) |
| subjects | Aggregate demand Bundesbank Central banks Collective bargaining Contract negotiations Economic and Monetary Union Economic conditions Economic inflation Economic models Economic policy Economic theory Employers Employment Euro Europe European Monetary Union European Union Exchange Rate Mechanism Foreign exchange rates Incentive pay Incentives Inflation Inflation rate Inflation rates Interest rates Labor unions Low inflation Monetary policy Policy studies Real wages Studies Wage negotiations Wages Wages & salaries |
| title | Wage‐Setting and Inflation Targets in EMU |
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