Unions' Coordination and the Central Banker's behavior in a Monetary Union

Patrice Borda (1) , Damien Gaumond , Olivier Manioc (1)

1 CREDDI - Centre de Recherche en Economie et en Droit du Développement Insulaire [UR7_2]

In a 2-country monetary union, this paper studies a Stackelberg game between the Central Banker and two symmetrical countries. The central banker chooses the money supply. In each country, there is a union who acts as a monopoly of labor supply. Firms are wage and price takers. We analyze the effects of internationally coordinated unions versus internationally uncoordinated unions. It is shown that wages are lower when unions are internationally coordinated and the money policy is more accomodating. This result is linked to the degree of conservatism of the Central Banker with respect to inflation. 1

Mots clés: JEL Classification: E24 E5 J51 P45 Monetary Union International Union Coodination Employment and Wage-Setting; JEL Classification: E24; E5; J51; P45 Monetary Union; International Union Coodination; Employment and Wage-Setting

Domaines: Économie et finance quantitative [q-fin]

Patrice Borda, Damien Gaumond, Olivier Manioc. Unions' Coordination and the Central Banker's behavior in a Monetary Union. 2006. ⟨hal-04053068⟩