Ester Faia, Vincenzo Pezone, 12 March 2019

Policymakers are concerned about effecting real change with monetary policy, particularly in the context of wage rigidity. This column uses extensive Italian data to analyse the extent to which wage rigidity induced by collective bargaining amplifies the effects of monetary policy. The volatility of stock market returns reacts more to monetary policy announcements when the average time left before the renewal of the employees’ collective agreement is large.

André Sapir, 12 February 2016

Misalignments of real exchange rates continue to be the most visible and painful symptom of asymmetric shocks within the Eurozone. An important factor behind such misalignment is the difference in national wage formation and bargaining systems, especially between core and periphery members. This column argues that all members need to have institutions that ensure wage developments are in line with productivity developments. This would eliminate an important source of asymmetric behaviour and reduce resistance to EZ-wide fiscal mechanisms capable of absorbing asymmetric shocks.

Santiago Sanchez-Pages, 24 September 2010

Are conflicts worth it? This column argues that they can be. While wars are extremely damaging, they can be in the interests of one party if they help reveal the true balance of power and thereby change the stakes in eventual negotiations. This explains why small countries take on superpowers with no chance of winning and why unions go on strike against laws already passed.

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