DP1731 Monetary Regimes and Labour Market Reform
|Author(s):||Anne Sibert, Alan Sutherland|
|Publication Date:||November 1997|
|Keyword(s):||Economic Reform, Monetary Union, Policy Coordination|
|JEL(s):||E61, F33, F42|
|Programme Areas:||International Macroeconomics|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=1731|
Policy-makers? incentives to undertake costly reform depends on the international monetary system. We consider the effect of monetary regimes on labour market reform. We find international negotiation of monetary policy produces less reform than non-cooperation. Reform is lowest of all with monetary union. Because integration lowers reform, inflation is higher under monetary union than with national currencies. It may be higher or lower with negotiation than no coordination. Despite the negative impact on reform, negotiation produces higher welfare than no coordination. Monetary union can produce higher or lower welfare than either negotiation or no coordination.