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Keywords:

  • D72;
  • E52;
  • E58;
  • F33
  • Transparency of monetary policy;
  • European monetary union;
  • labor market regulation

Abstract. The paper analyzes the relation between monetary uncertainty and government incentives to implement economic reforms in order to reduce structural distortions and make economies more flexible. It is shown that uncertainty about the central bank's behavior leads to more reforms. I relate this result to the debate about central bank structure in a larger European monetary union.