Optimal adjustment paths in a monetary union
"Adjustment to an external imbalance is more difficult within a monetary union if wages are sticky. Periods of high unemployment are usually necessary to achieve the required real depreciation (internal devaluation). Gradual adjustment is usually recommended to distribute the output and employm...
| Main Authors: | , |
|---|---|
| Institution: | ETUI-European Trade Union Institute |
| Format: | TEXT |
| Language: | English |
| Published: |
Brussels
2016
CEPS |
| Subjects: | |
| Online Access: | https://www.labourline.org/KENTIKA-043012486129-optimal-adjustment-paths-in-a-.htm |
| _version_ | 1771659892921204736 |
|---|---|
| author | Belke, Ansgar Gros, Daniel |
| author_facet | Belke, Ansgar Gros, Daniel |
| collection | Library items |
| description | "Adjustment to an external imbalance is more difficult within a monetary union if wages are sticky. Periods of high unemployment are usually necessary to achieve the required real depreciation (internal devaluation). Gradual adjustment is usually recommended to distribute the output and employment cost over time. This paper takes into account that gradual adjustment also has a cost in terms of higher current account deficits and thus a higher debt, and ultimately higher debt-service costs. We calculate the optimal path/speed of price and wage adjustment in terms of deeper parameters like the slope of the Phillips curve, the degree of openness, etc. Gradual adjustment is not always optimal." |
| format | TEXT |
| geographic | EU countries |
| id | 043012486129_a1ff3ccef97543afbf60648f97d9e76f |
| institution | ETUI-European Trade Union Institute |
| is_hierarchy_id | 043012486129_a1ff3ccef97543afbf60648f97d9e76f |
| is_hierarchy_title | Optimal adjustment paths in a monetary union |
| language | English |
| physical | 20 p. Digital |
| publishDate | 2016 |
| publisher | Brussels CEPS |
| spellingShingle | Belke, Ansgar Gros, Daniel EMU labour cost structural adjustment wages Optimal adjustment paths in a monetary union |
| thumbnail | https://www.labourline.org/Image_prev.jpg?Archive=106927992410 |
| title | Optimal adjustment paths in a monetary union |
| topic | EMU labour cost structural adjustment wages |
| url | https://www.labourline.org/KENTIKA-043012486129-optimal-adjustment-paths-in-a-.htm |