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48 Program on Central and Eastern Europe

The Communist Taboo Against Unemployment: Ideology, Soft-Budget Constraints, or the Politics of De-Stalinization?

1999 – Phineas Baxandall


This paper explores the fashionable proposition that with a more independent central bank, a country can secure lower levels of inflation without higher unemployment. Hall shows that the operation of the central bank depends on the character of wage bargaining. He illustrates this point with some cross-national data and an analysis of how coordinated wage bargaining is secured in Germany. He concludes by exploring the implications of this analysis for European Monetary Union.