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The effects of inflation on wage adjustments in firm-level data: grease or sand?

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  • Erica L. Groshen
  • Mark E. Schweitzer

Abstract

An analysis of whether inflation facilitates adjustments to shocks or distorts relative prices, examining the wage-setting process across a panel of occupations and employers and finding that the costs of inflation may rise more rapidly than its benefits beyond quite modest rates of increase in the price level.

Suggested Citation

  • Erica L. Groshen & Mark E. Schweitzer, 1994. "The effects of inflation on wage adjustments in firm-level data: grease or sand?," Working Paper 9418, Federal Reserve Bank of Cleveland.
  • Handle: RePEc:fip:fedcwp:9418
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    References listed on IDEAS

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    4. Haley, James, 1990. " Theoretical Foundations for Sticky Wages," Journal of Economic Surveys, Wiley Blackwell, vol. 4(2), pages 115-155.
    5. Erica Groshen & Mark Schweitzer, 1999. "Identifying Inflation's Grease and Sand Effects in the Labor Market," NBER Chapters,in: The Costs and Benefits of Price Stability, pages 273-314 National Bureau of Economic Research, Inc.
    6. Lach, Saul & Tsiddon, Daniel, 1992. "The Behavior of Prices and Inflation: An Empirical Analysis of Disaggregated Price Data," Journal of Political Economy, University of Chicago Press, vol. 100(2), pages 349-389, April.
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    8. Bils, Mark J, 1985. "Real Wages over the Business Cycle: Evidence from Panel Data," Journal of Political Economy, University of Chicago Press, vol. 93(4), pages 666-689, August.
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    Keywords

    Inflation (Finance) ; Wages;

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