Author (Person) | Dullien, Sebastian |
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Series Title | European Political Economy Review |
Series Details | Vol.1, No.2, Autumn 2003 |
Publication Date | September 2003 |
ISSN | 1742-5697 |
Content Type | Journal | Series | Blog |
This article asks why unemployment performance in small countries in European Monetary Union has been superior to that in large EMU countries. Within a model of monopolistic competition, it is shown that a possible answer is a beggar the neighbour policy by the small countries. When dropping the real balance effect from a standard model of monopolistic competition, it is found that a monopoly trade union setting wages for a large economy cannot influence employment and output by changing nominal wages. A trade union in a small country which is in a monetary union with a large country, on the other hand, can increase output and employment by wage restraint. |
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Source Link | http://www.lse.ac.uk/collections/EPIC/documents/eper.htm |
Subject Categories | Employment and Social Affairs |
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