Wage Moderation in Crises Policy Considerations and Applications to the Euro Area
The paper studies the impacts of wage moderation in the euro area. Simulation results show that if a single euro area crisis-hit economy undertakes wage moderation, the impact on output is positive for that economy and for the entire euro area. If all crisis-hit economies undertake wage moderation t...
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| Other Authors: | , , |
| Format: | eBook |
| Language: | English |
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Washington, D.C.
International Monetary Fund
2015
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| Series: | Staff Discussion Notes
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| Online Access: | |
| Collection: | International Monetary Fund - Collection details see MPG.ReNa |
| Summary: | The paper studies the impacts of wage moderation in the euro area. Simulation results show that if a single euro area crisis-hit economy undertakes wage moderation, the impact on output is positive for that economy and for the entire euro area. If all crisis-hit economies undertake wage moderation together, their output still expands, albeit to a lesser degree. If the wage moderation is accompanied by cuts in policy interest rates by the central bank-and by quantitative easing once interest rates hit the zero lower bound-then output for the entire euro area expands as well |
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| Physical Description: | 36 pages |
| ISBN: | 9781513537009 |