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Article: Nominal versus real wage rigidity in a monopoly union: A synthesis.
- Article from:
- Atlantic Economic Journal
- Article date:
- March 1, 2002
- Author:
CopyrightCOPYRIGHT 2002 Atlantic Economic Society. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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Ching-Chong Lai (*) Juin-Jen Chang (**)
Introduction
In his recent paper, Benassy [1995, p. 635] claimed that, "Whether rational wage setting by explicitly maximizing agents leads to real or nominal rigidities ... is evidently an issue of utmost importance to explain the causes of potential market imbalances and study corrective policies." Based on a monopoly union model in which wages are set by a utility maximizing union, this paper attempts to provide a synthesis of the possible situations generating either real or nominal wage rigidity. (1)
Among the literature on monopoly union models, Oswald [1985] finds that whenever the elasticity of ...