Cooperation between European Central Bank, German Labour Union, and French Labour Union

Abstract

1) Introduction. As a starting point, take the output model. It can be represented by a system of two equations:

$$ Y_1 = A_1 + \alpha {\rm M} - \gamma W_1 $$

(1)

$$ Y_2 = A_2 + \alpha {\rm M} - \gamma W_2 $$

(2)

Here Y₁ denotes German output, Y₂ is French output, M is European money supply, W₁ is German nominal wages, W₂ is French nominal wages, α is the monetary policy multiplier, and γ is the wage policy multiplier. The endogenous variables are German output and French output.