caa a22 4500 388051558 CHVBK 20180307125054.0 cr unu---uuuuu 161130s1998 xx s 000 0 eng 10.1162/002081898550644 doi S002081839844044X pii (NATIONALLICENCE)cambridge-10.1162/002081898550644 Mixed Signals: Central Bank Independence, Coordinated Wage Bargaining, and European Monetary Union [Elektronische Daten] Plans for the European Monetary Union (EMU) are based on the conventional postulate that increasing the independence of the central bank can reduce inflation without any real economic effects. However, the theoretical and empirical bases for this claim rest on models of the economy that make unrealistic information assumptions and omit institutional variables other than the central bank. When signaling problems between the central bank and other actors in the political economy are considered, we find that the character of wage bargaining conditions the impact of central bank independence by rendering the signals between the bank and the bargainers more or less effective. Greater central bank independence can reduce inflation without major employment effects where bargaining is coordinated, but it can bring higher levels of unemployment where bargaining is less coordinated. Thus, currency unions like the EMU may require higher levels of unemployment to control inflation than their proponents envisage. They will have costs as well as benefits, and these will be unevenly distributed among and within the member nations, depending on the changes they induce in the status of the bank and of wage coordination. Copyright © The IO Foundation 1998 Hall Peter A. Franzese Robert J. International Organization Cambridge University Press 52/3(1998), 505-535 0020-8183 52:3<505 1998 52 INO https://doi.org/10.1162/002081898550644 text/html Onlinezugriff via DOI 1 research-article jats NATIONALLICENCE 856 40 https://doi.org/10.1162/002081898550644 text/html Onlinezugriff via DOI NATIONALLICENCE 700 1- Hall Peter A. NATIONALLICENCE 700 1- Franzese Robert J. NATIONALLICENCE 773 0- International Organization Cambridge University Press 52/3(1998), 505-535 0020-8183 52:3<505 1998 52 INO CC0 http://creativecommons.org/publicdomain/zero/1.0 nationallicence BK010053 XK010053 XK010000 NATIONALLICENCE NATIONALLICENCE NL-cambridge