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Wage restraint may increase employment eventually while deepening unemployment first. Peter Rosner, Gerhard Tintner, Andreas Wörgötter, and Gabriele Wörgötter make this tension central to their analysis of a small open economy. Their modified Dornbusch model treats restraint as slower wage and price growth without shifting income from wages to profits. Under fixed exchange rates, reduced inflation raises real interest rates before improved competitiveness can stimulate demand; under flexible rates, the initial currency movement makes the transition less predictable. Yet the model’s eventual employment gains are the same under either regime. The article offers a precise way to distinguish a policy’s destination from the costs of reaching it—and to understand why demand support and coordinated policy matter when wage adjustment promises recovery but initially worsens recession.