The reason for this is the rigidity of money wage contracts. Predicated on this, we would assume that a rise in prices only temporarily reduces real wages, and the quantity of labor supply would simply increase.
Before joining the ECB, I spent five years managing France’s debt and cash at Agence France Trésor, the French equivalent of the Finance Agency in Germany. That’s when I first came across Pfandbriefe as an important building block of Europe’s fixed income market. What is the importance of Pfandbriefe and other covered bonds in monetary transmission?