Title: Wages and prices in Europe before and after the onset of the Monetary Union
Citation: ECONOMIC MODELLING vol. 35 p. 643–653
Publication Year: 2013
JRC N°: JRC60985
ISSN: 0264-9993
URI: http://www.sciencedirect.com/science/article/pii/S0264999313003246
DOI: 10.1016/j.econmod.2013.08.009
Type: Articles in periodicals and books
Abstract: This paper investigates possible structural changes induced by the Euro on the relations amongwages, prices and unemployment for the five major European economies. The dynamic adjustment and the level relations are found to be different across subperiods as well as across countries. During the European Economic andMonetary Union (EMU) period, there is evidence of a conventionally-sloped Phillips Curve for the four economies within the EMU, with a higher degree of homogeneity with respect to the pre-EMU period; the UK presents instead a positively-sloped Phillips Curve in the EMU period. In this latter period, deviations from reference values are found to influence unemployment for all countries, including the UK. Only for Germany and Spain, instead, we find evidence that deviations from reference values influence inflation dynamics.
JRC Directorate:Space, Security and Migration

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