Are The Income Policy Agreements Of 1992-93 In Italy Still Valid?Towards A Theory For The Optimal Design Of The “Social Pact”In The European Monetary Union
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This chapter analyses the macroeconomic consequences of a “social pact” among the government, trade unions and employers’ associations aimed at keeping the growth in domestic wages and prices in line with the government’s inflation target in a country belonging to a monetary union. We demonstrate that an outward-looking social pact which targets union-wide inflation can lead employment at the competitive level and eliminating the inflationary (or deflationary) bias in the economy.
Key words: Employment, inflation, social pacts, EMU.
KeywordsMonetary Policy Central Bank Trade Union Real Wage Monetary Union
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