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The Macroeconomic Consequences of Wage Indexation Revisited
Author:
Mr. Esteban Jadresic
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Series:
IMF Working Papers
Volume/Issue:
Volume 1998: Issue 015
Language:
English
Publication Date:
01 Feb 1998
DOI:
https://doi.org/10.5089/9781451843231.001
ISBN:
9781451843231
ISSN:
1018-5941
Pages:
54
Keywords:
WP; wage contract; exchange rate; open economy; Wages; indexation; macroeconomics; indexation clause; indexation rule; indexation literature; inflation variability; indexation period; wage indexation need; Wage indexation; Inflation; Wage adjustments; Real wages
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IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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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.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund