Non-neutrality of monetary policy in policy games

Abstract

The main aim of this article is to investigate the sources of non- neutrality in policy games involving one or more trade unions. We use a simple set up in order to clearly expose the basic mechanisms that also work in more complex frameworks. We show that there are common roots in the non-neutrality results so far obtained in apparently different contexts as, e.g., an inflation-averse union playing against the government; a union sharing some other common objective with a policy maker; or when more than one union interacts with monopolistic competitors in the goods market and a policymaker. We finally show that there are other cases where the non-neutrality result can arise.neutrality, money, unions, policy game