This thesis extends a recent vein of literature which investigates the implications of wage decisions for the optimal design of the monetary regime when the goods market is monopolistically competitive. Chapter II abstracts from the existence of stochastic shocks and examines in detail the resulting macroeconomic wage-setting externality. It points out that when the monetary instrument is set after wage determination, there exists a monetary rule which can induce non-atomistic unions to set the market-clearing nominal wage, and which therefore is fully credible. This result is shown to be implicit in (and to have been overlooked by) previous contributions, and its sensitivity to the precise formulation of the union objective function is discussed. Chapter III allows for stochastic shocks, and in particular builds upon Herrendorf and Lockwood (1997) by assuming that each union receives a (common) noisy signal of a productivity shock prior to setting its individual wage. The adverse macroeconomic externality which arises in this scenario is analysed, and the circumstances under which improvements in signal quality are detrimental to union welfare are identified. It is shown that when unions are nonatomistic, the externality's strength, and hence also both employment variability and the stochastic inflation bias, are sensitive to the specification of the authorities' monetary reaction function. This implies a candidate explanation for why greater central-bank conservatism has generally not been found to be associated with greater output variability. The optimal central-bank delegation arrangements are identified, as well as the optimal amount of transparency regarding supply shocks. Chapters V and VI then analyse the externalities appertaining to indexation decisions taken in the absence of informative signals, both for the standard scenario in which the wage is indexed only to the price level, and for multiparameter indexation scenarios in which the wage is also contingent on a second aggregate variable.