%0 Journal Article
%T Aggregate Wage Flexibility in New EU Member States
%A Jan Babecky
%J AUCO Czech Economic Review
%D 2008
%I Charles University in Prague
%X A fixed exchange rate regime eliminates one degree of freedom in absorbing macroeconomic shocks. Therefore, there is a call for higher labor market flexibility in countries which are members of the monetary union or those which intend to join the monetary union. Focusing on the cross-country analysis of labor markets in the enlarged European Union, this paper aims to assess empirically the role of aggregate wages as a correction mechanism for dealing with economic disturbances. We apply classical time series/panel, state-space and cointegration techniques to determine the extent to which aggregate wages can accommodate shocks in the economy.
%K ERM-II
%K euro adoption
%K labor market
%K wage flexibility
%U http://auco.fsv.cuni.cz/storage/37_2008_01_123.pdf