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Strategic monetary policy with non-atomistic wage setters
No full textMonetary policy analyses usually assume an atomistic private sector, thereby ignoring potential
interactions between policy and wage-setting decisions. Yet, non-atomistic wage setters are a key feature
of several industrialized economies. We study the economic consequence of non-atomistic agents and
show that this qualifies previous results on the effects and desirability of a conservative central banker. In
particular, the central bank aversion to inflation may have a permanent effect on structural employment,
while no such effect emerges with atomistic agents
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