IDEAS home Printed from https://ideas.repec.org/a/mcb/jmoncb/v26y1994i4p941-50.html
   My bibliography  Save this article

Wage Indexation and Time Consistency

Author

Listed:
  • Milesi-Ferretti, Gian Maria

Abstract

This note presents a simple model where the decision on the degree of wage indexation is taken by a 'large' agent, such as the government. The optimal degree of indexing is shown to depend on the variance of real shocks and on the 'inflations bias' of the government, due to the incentive to raise employment above the market-clearing level. Wage indexation will be low if real shocks are large and if the government is inflation-averse. The ability of monetary policy to offset monetary disturbances makes them irrelevant to the determination of the optimal degree of indexing. Copyright 1994 by Ohio State University Press.

Suggested Citation

  • Milesi-Ferretti, Gian Maria, 1994. "Wage Indexation and Time Consistency," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 26(4), pages 941-950, November.
  • Handle: RePEc:mcb:jmoncb:v:26:y:1994:i:4:p:941-50
    as

    Download full text from publisher

    File URL: http://links.jstor.org/sici?sici=0022-2879%28199411%2926%3A4%3C941%3AWIATCN%3E2.0.CO%3B2-T&origin=bc
    File Function: full text
    Download Restriction: Access to full text is restricted to JSTOR subscribers. See http://www.jstor.org for details.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Giuseppe Diana & Pierre‐Guillaume Méon, 2008. "Monetary Policy in the Presence of Asymmetric Wage Indexation," Southern Economic Journal, John Wiley & Sons, vol. 75(1), pages 69-90, July.
    2. Esteban Jadresic, 2002. "The Macroeconomic COnsequences of Wage Indexation Revisited," Central Banking, Analysis, and Economic Policies Book Series, in: Fernando Lefort & Klaus Schmidt-Hebbel & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (Serie (ed.),Indexation, Inflation and Monetary Policy, edition 1, volume 2, chapter 8, pages 207-258, Central Bank of Chile.
    3. Pani, Marco & Perroni, Carlo, 2018. "Energy subsidies and policy commitment in political equilibrium," Energy Economics, Elsevier, vol. 71(C), pages 149-160.
    4. Crowe, Christopher, 2004. "Inflation, inequality and social conflict," LSE Research Online Documents on Economics 19932, London School of Economics and Political Science, LSE Library.
    5. Mr. Esteban Jadresic, 1998. "The Macroeconomic Consequences of Wage Indexation Revisited," IMF Working Papers 1998/015, International Monetary Fund.
    6. Joeri Gorter & Suzanne Kok, 2009. "Agglomeration economies in the Netherlands," CPB Discussion Paper 124.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    7. Mr. Christopher W. Crowe, 2006. "Goal-Independent Central Banks: Why Politicians Decide to Delegate," IMF Working Papers 2006/256, International Monetary Fund.
    8. Chris Crowe, 2004. "Inflation, Inequality and Social Conflict," Money Macro and Finance (MMF) Research Group Conference 2004 69, Money Macro and Finance Research Group.
    9. James Cover & David Hoose, 2002. "Asymmetric wage indexation," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 30(1), pages 34-47, March.
    10. Rodríguez, Carlos A., 2011. "Credibilidad, pérdida social y estancamiento económico: el caso de Puerto Rico [Credibility, Social Loss and Economic Stagnation: the Case of Puerto Rico]," MPRA Paper 41277, University Library of Munich, Germany.
    11. Nir Klein, 2003. "Reputation and Indexation in an Inflation Targeting Framework," Bank of Israel Working Papers 2003.13, Bank of Israel.
    12. Oscar Landerretche & Fernando Lefort & Rodrigo O. Valdés, 2002. "Causes and Consequences of Indexation: A Review of the Literature," Central Banking, Analysis, and Economic Policies Book Series, in: Fernando Lefort & Klaus Schmidt-Hebbel & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (Serie (ed.),Indexation, Inflation and Monetary Policy, edition 1, volume 2, chapter 2, pages 019-064, Central Bank of Chile.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mcb:jmoncb:v:26:y:1994:i:4:p:941-50. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley-Blackwell Digital Licensing or Christopher F. Baum (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=0022-2879 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.