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Openness, Central Wage Bargaining, and Inflation

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dc.contributor.author Daniels, Joseph P.
dc.contributor.author Nourzad, Farrokh
dc.contributor.author VanHoose, David D.
dc.date.copyright October 21, 2004
dc.identifier.uri http://hdl.handle.net/2104/324
dc.description.abstract This paper develops a model of an open economy containing both sectors in which wages are market-determined and sectors with wage-setting arrangements. A portion of the latter group of sectors coordinate their wages, taking into account that their collective actions influence the equilibrium inflation outcome in an environment in which the central bank engages in discretionary monetary policymaking. Key predictions forthcoming from this model are (1) increased centralization of wage setting initially causes inflation to increase but then results in an inflation dropoff, (2) a greater degree of centralized wage setting reduces the inflation-restraining effect of greater central bank independence, and (3) increased openness is more likely to reduce inflation in nations with less centralized wage bargaining. Analysis of data for seventeen nations for the period 1970-1999 provides generally strong and robust empirical support for all three of these predictions. en
dc.relation.ispartofseries BaylorBusiness Economics: Working Papers Series en
dc.relation.ispartofseries 2005-059-ECO en
dc.subject Open Economy en
dc.subject Wage Setting en
dc.subject Inflation en
dc.title Openness, Central Wage Bargaining, and Inflation en
dc.type Working Paper en


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