Wage and price rigidity in a monetary union

Bernardino Adao*, Isabel Correia, Pedro Teles

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

2 Citations (Scopus)


We extend irrelevance results of sticky prices and fixed exchange rates to environments with sticky wages. Provided payroll taxes can be used with the same flexibility as monetary policy, then sticky wages are irrelevant for both optimal allocations and policies in response to shocks. This is the case also under fixed exchange rates or in a monetary union.
Original languageEnglish
Pages (from-to)109-126
Number of pages18
JournalOpen Economies Review
Issue number1
Publication statusPublished - Mar 2010


  • Fiscal and monetary policy
  • Fixed exchange rates
  • Monetary union
  • Stabilization policy
  • Sticky prices
  • Sticky wages


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