Sebastian Dullien gives a novel explanation for unemployment and
inflation in the Euro-Zone. He argues that unemployment stems from
a lack of cooperation between unions and monetary authorities: In
an economy with endogenous money as EMU, wage setters are
responsible for price stability while the central bank is
responsible for the level of output. Cooperation between both
actors is necessary for high employment and low inflation. The
current institutional set-up is found to be unable to assure
cooperation.
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