Wage Divergence, Business Cycle Co‐Movement and the Currency Union Effect
Bibliographic Data
| ID | 10070294 |
|---|---|
| Authors | Martin Gächter (0000-0002-4583-3300, Oesterreichische Nationalbank Austria, corresponding author), Alexander Gruber (0000-0002-3280-7023, University of St. Gallen Switzerland), Aleksandra Riedl (Oesterreichische Nationalbank Austria) |
| Year | 2017 |
| Volume | 55 |
| Issue | 6 |
| Pages | 1322-1342 |
| Publication date | 2017-05-26 |
| Peer Reviewed | Yes |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | JCMS Journal of Common Market Studies (JOURNAL) |
| Journal identifiers | ISSN: 0021-9886 • E-ISSN: 1468-5965 |
| Publisher | Wiley (PUBLISHER • GB) |
| DOI | 10.1111/jcms.12574 |
| OpenAlex | W2339402830 |
| Language | EN |
| Citations received | 2 |
| References cited | 29 |
This paper studies the impact of wage growth divergence on business cycle co‐movement in the context of currency unions. While the theoretical literature on optimum currency areas highlights the equilibrating effect of divergent wage growth after asymmetric exogenous demand shocks via the external demand channel, recent literature on euro area imbalances emphasizes its dis‐equilibrating effect as a source of asymmetric domestic demand shocks, and therefore suggests a negative link to business cycle co‐movement. Our empirical results reveal that the latter effect has been clearly dominating in the euro area: Wage growth differentials across countries – while of minor importance for non‐euro area EU countries with sovereign currencies – significantly reduce business cycle co‐movement within the monetary union and thus increase the cost of the common monetary policy. The large magnitude of the effect calls for enhanced co‐ordination efforts of wage policies in the euro area
Business cycle · Context (archaeology · Currency · Currency union · Economics · Exchange rate · International economics · Labour economics · Macroeconomics · Monetary economics · Monetary policy · Optimum currency area · Wage · Banking stability, regulation, efficiency · Global Financial Crisis and Policies · Monetary Policy and Economic Impact
Essays in positive economics
Postwar U.S. Business Cycles
The external wealth of nations mark II
How to do Xtabond2
Some Tests of Specification for Panel Data
Initial conditions and moment restrictions in dynamic panel data models
On Adjusting the Hodrick-Prescott Filter for the Frequency of Observations
Trade, Finance, Specialization, and Synchronization
Measuring Business Cycles
The Real Effects of European Monetary Union
The European Sovereign Debt Crisis
On Exchange Rate Unification
The Endogenity of the Optimum Currency Area Criteria
Economic causes of the Eurozone crisis
Comparative Institutional Advantage in the European Sovereign Debt Crisis
European Monetary Integration and the Incompatibility of National Varieties of Capitalism
| Unique citing works | 2 |
|---|---|
| Citations per year | 0,29 |
| Citation span | 2019 - 2024 (6) |
| Citation velocity | recent |
| Highly cited | No |
| Citation types | Neutral: 2 |