Wage Rigidity, Monetary Integration and Fiscal Stabilization in Europe

Svend E. Hougaard Jensen

doi:10.1111/1467-9396.5.4s.3

Wage Rigidity, Monetary Integration and Fiscal Stabilization in Europe

Svend E. Hougaard Jensen

Københavns Universitet

Publikation: Bidrag til tidsskrift › Tidsskriftartikel › Forskning › peer review

Abstract

Flexibility in fiscal policy is a necessary ingredient in a policy package for EMU. Even with strong endogenous shock absorbers, such as real wage flexibility, fiscal policy can speed up the stabilization process in response to demand shocks. If real wages are rigid, as they typically are in Europe, fiscal policy cannot remove the adverse effects of asymmetric supply shocks, but it can successfully limit the divergence between member states. Monetary flexibility, a possible option in the run-up to EMU, cannot completely make up for the stabilization function of fiscal policy.

Originalsprog	Engelsk
Tidsskrift	Review of International Economics
Vol/bind	5
Udgave nummer	5, Supplement European Economic
Sider (fra-til)	36-54
Antal sider	19
ISSN	0965-7576
DOI	https://doi.org/10.1111/1467-9396.5.4s.3
Status	Udgivet - nov. 1997
Udgivet eksternt	Ja

Emneord

Monetary policy
European economic integration

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10.1111/1467-9396.5.4s.3Licens: Ikke-specificeret

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Citationsformater

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