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Is Small Really Beautiful? Explaining Different Unemployment Performances within the Euro-Zone

Dullien, Sebastian. (2003) Is Small Really Beautiful? Explaining Different Unemployment Performances within the Euro-Zone. European Political Economic Review, 1 (2). pp. 126-151.

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    Abstract

    This article asks why unemployment performance in small countries in European Monetary Union has been superior to that in large EMU countries. Within a model of monopolistic competition, it is shown that a possible answer is a beggar-thy-neighbor policy by the small countries. When dropping the real balance effect from a standard model of monopolistic competition, it is found that a monopoly trade union setting wages for a large economy cannot influence employment and output by changing nominal wages. A trade union in a small country which is in a monetary union with a large country, on the other hand, can increase output and employment by wage restraint.

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    Item Type: Article
    Subjects for non-EU documents: EU policies and themes > Policies & related activities > employment/labour market > employment/unemployment
    EU policies and themes > Policies & related activities > economic and financial affairs > EMU/EMS/euro
    Subjects for EU documents: UNSPECIFIED
    EU Series and Periodicals: UNSPECIFIED
    EU Annual Reports: UNSPECIFIED
    Series: Journals > European Political Economy Review
    Depositing User: Phil Wilkin
    Official EU Document: No
    Language: English
    Date Deposited: 23 Mar 2006
    Page Range: pp. 126-151
    Last Modified: 15 Feb 2011 17:40
    URI: http://aei.pitt.edu/id/eprint/6042

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