Abstract
This paper deals with the impact of wage indexation on the rate of inflation in two alternative institutional settings: simultaneous and overlapping multiperiod contracts. The results show that in the case of simultaneous contracts, the degree of indexation determines the timing of price changes but not its intercontract magnitude. When contracts are overlapping and uniformly distributed over time, indexation always increases the absolute rate of inflation and its variability.
Original language | English |
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Pages (from-to) | 1299-1312 |
Number of pages | 14 |
Journal | European Economic Review |
Volume | 31 |
Issue number | 6 |
DOIs | |
State | Published - 1987 |