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.

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CEPR Policy Research