Universität zu Köln

Hoffmann, Mathias, Kliem, Martin, Krause, Michael ORCID: 0000-0001-5265-3116, Moyen, Stephane and Sauer, Radek (2021). Rebalancing the euro area: Is wage adjustment in Germany the answer? Journal of International Money Finance, 119. p. 102497. OXFORD: ELSEVIER SCI LTD. ISSN 1873-0639

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Abstract

We assess the extent to which wage inflation policies in Germany could contribute to an economic rebalancing in the euro area and the rest of the world. We find that a rise in nom-inal wage inflation has positive short-run effects on inflation and output in Germany and the rest of the euro area. The duration of constant interest rates and expectations about the monetary policy stance matter to the magnitude of the results obtained. We establish that the modeling of the trade relationships with the rest of the world is of particular importance, as it allows us to capture the induced relative price movements and hence changes in competitiveness within the three regions. Our results are obtained from an estimated DSGE model which consists of Germany, the rest of the euro area, and the rest of the world. (C) 2021 Elsevier Ltd. All rights reserved.

Item Type:	Journal Article
Creators:	Creators Email ORCID ORCID Put Code Hoffmann, Mathias UNSPECIFIED UNSPECIFIED UNSPECIFIED Kliem, Martin UNSPECIFIED UNSPECIFIED UNSPECIFIED Krause, Michael UNSPECIFIED orcid.org/0000-0001-5265-3116 UNSPECIFIED Moyen, Stephane UNSPECIFIED UNSPECIFIED UNSPECIFIED Sauer, Radek UNSPECIFIED UNSPECIFIED UNSPECIFIED
URN:	urn:nbn:de:hbz:38-578347
DOI:	10.1016/j.jimonfin.2021.102497
Journal or Publication Title:	Journal of International Money Finance
Volume:	119
Page Range:	p. 102497
Date:	2021
Publisher:	ELSEVIER SCI LTD
Place of Publication:	OXFORD
ISSN:	1873-0639
Language:	English
Faculty:	Faculty of Management, Economy and Social Sciences
Divisions:	Weitere Institute, Arbeits- und Forschungsgruppen > Center for Macroeconomic Research (CMR)
Subjects:	Economics
Uncontrolled Keywords:	Keywords Language GLOBAL ECONOMY MODEL; MONETARY-POLICY; RIGIDITY; FRICTIONS; SHOCKS; CRISIS Multiple languages Business, Finance Multiple languages
Refereed:	Yes
URI:	http://kups.ub.uni-koeln.de/id/eprint/57834