The Single Currency and Labour Market Flexibility: a Necessary Partnership? |
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| Authors: | A J Hughes Hallett Yue Ma & Maria Demertzis |
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| Institution: | University of Strathclyde, Glasgow, and CEPR, London, UK,;University of Stirling, UK,;de Nederlandsche Bank |
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| Abstract: | This paper examines the macroeconomic consequences of rigidities in the European labour markets, and shows that attempts to impose a single monetary regime on economies with different structures can lead to a breakdown in co-ordination. Such breakdowns can occur when expenditure-switching effects are dominated by the income effects of greater policy discipline. Market flexibility should therefore be given greater importance than the process of policy formulation in the 'New Europe' |
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