The Macroeconomic Consequences of Wage Indexation Revisited

Author/Editor:

Esteban Jadresic

Publication Date:

February 1, 1998

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

Since the mid-1970s, there has been considerable research on the macroeconomic consequences of wage indexation. Nonetheless, until recently, this research had not explicitly explored the implications of contracts that index wages to lagged inflation, the usual type of wage indexation observed in practice. Drawing mainly on recent research by the author, this paper examines the consequences of wage indexation to lagged inflation on aggregate wage formation, the cost of disinflation under money- and exchange-rate-based stabilization, the variability of output under alternative shocks and policy regimes, the choice of exchange rate regime, and the level and variability of inflation.

Series:

Working Paper No. 1998/015

Subject:

Inflation Labor Prices Real wages Wage adjustments Wage indexation Wages

English

Publication Date:

February 1, 1998

ISBN/ISSN:

9781451843231/1018-5941

Stock No:

WPIEA0151998

Pages:

54

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