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.
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© 2008 Springer Science+Business Media, LLC
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Cavallari, L. (2008). 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. In: Padovano, F., Ricciuti, R. (eds) Italian Institutional Reforms: A Public Choice Perspective. Springer, New York, NY. https://doi.org/10.1007/978-0-387-72141-5_4
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DOI: https://doi.org/10.1007/978-0-387-72141-5_4
Publisher Name: Springer, New York, NY
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