Böck M, Glocker C (2025)
Publication Language: English
Publication Type: Journal article, Original article
Publication year: 2025
URI: https://onlinelibrary.wiley.com/doi/10.1111/obes.70029
DOI: 10.1111/obes.70029
Open Access Link: https://doi.org/10.1111/obes.70029
We examine how labour market institutions shape monetary policy transmission in euro area countries. A theoretical model suggests that higher union density flattens the Phillips curve, amplifying output responses while dampening the inflation effects of monetary shocks. This is empirically confirmed using an interacted panel VAR. In contrast, benefit replacement rates and employment protection legislation have a limited impact. Our findings point to a structural, not cyclical, driver of monetary policy effectiveness, highlighting the importance of labour market features. In a monetary union, such heterogeneity can lead to inefficient inflation and output differentials across member states.
APA:
Böck, M., & Glocker, C. (2025). The Role of Labor Market Institutions in Shaping Euro Area Monetary Policy Transmission. Oxford Bulletin of Economics and Statistics. https://doi.org/10.1111/obes.70029
MLA:
Böck, Maximilian, and Christian Glocker. "The Role of Labor Market Institutions in Shaping Euro Area Monetary Policy Transmission." Oxford Bulletin of Economics and Statistics (2025).
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