6533b7ddfe1ef96bd12752cb
RESEARCH PRODUCT
Current Accounts and Coordination of Wage Bargaining
Kari HeimonenMika NieminenTimo Tohmosubject
coordination of wage bargainingexchange rate adjustmentFlexibility (engineering)Economics and Econometricscurrent account balance050208 financetyömarkkinasopimuksetmedia_common.quotation_subjectvaihtotase05 social sciencesWagecurrent account dynamicstyömarkkinatCurrent accountMonetary economicsModerationpalkat0502 economics and businessEconomics050207 economicstyömarkkinajärjestötWage bargainingmedia_commondescription
This study provides novel evidence on the impact of labor market institutions on current account dynamics. Our results suggest that a high degree of coordination of wage bargaining has a positive effect on the current account balance over the long run. This result is not driven entirely by wage moderation induced by centralized wage setting. We also provide robust evidence that a high degree of coordination of wage bargaining is associated with a slower current account adjustment toward its long-run equilibrium. This result seems theoretically plausible; the aggregate shocks in the exporting sector are largely driven by idiosyncratic shocks and the presence of idiosyncratic shocks increases the importance of labor market flexibility. Overall, our analysis of the impact of labor market institutions on current account dynamics complements the existing empirical current account literature focused on macroeconomic and financial measures. peerReviewed
| year | journal | country | edition | language |
|---|---|---|---|---|
| 2018-09-04 | SSRN Electronic Journal |