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Inflation and Wage Indexation in the Postwar U.S

  • Steven Holland

    (University of Kentucky)

Registered author(s):

    This paper examines the relationship between inflation and wage indexation in the postwar U.S. using data on the prevalence of cost-of- living adjustments in major collective bargaining agreements. I find that increases in inflation precede increases in wage indexation but reductions in inflation do not precede reductions in wage indexation. There is virtually no evidence that wage indexation affects inflation.

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    File URL: http://econwpa.repec.org/eps/mac/papers/9402/9402001.pdf
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    File URL: http://econwpa.repec.org/eps/mac/papers/9402/9402001.ps.gz
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    Paper provided by EconWPA in its series Macroeconomics with number 9402001.

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    Length: 17 pages
    Date of creation: 07 Feb 1994
    Date of revision:
    Handle: RePEc:wpa:wuwpma:9402001
    Note: 17 pages including one table and one figure.
    Contact details of provider: Web page: http://econwpa.repec.org

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    1. Cecchetti, Stephen G, 1987. "Indexation and Incomes Policy: A Study of Wage Adjustment in Unionized Manufacturing," Journal of Labor Economics, University of Chicago Press, vol. 5(3), pages 391-412, July.
    2. Holland, A Steven, 1986. "Wage Indexation and the Effect of Inflation Uncertainty on Employment:An Empirical Analysis," American Economic Review, American Economic Association, vol. 76(1), pages 235-43, March.
    3. Fischer, Stanley, 1983. "Indexing and inflation," Journal of Monetary Economics, Elsevier, vol. 12(4), pages 519-541, November.
    4. Dickey, David A & Fuller, Wayne A, 1981. "Likelihood Ratio Statistics for Autoregressive Time Series with a Unit Root," Econometrica, Econometric Society, vol. 49(4), pages 1057-72, June.
    5. Stanley Fischer & Lawrence H. Summers, 1989. "Should Nations Learn to Live With Inflation?," NBER Working Papers 2815, National Bureau of Economic Research, Inc.
    6. Ball, Laurence & Cecchetti, Stephen G, 1991. "Wage Indexation and Discretionary Monetary Policy," American Economic Review, American Economic Association, vol. 81(5), pages 1310-19, December.
    7. Ball, Laurence, 1992. "Why does high inflation raise inflation uncertainty?," Journal of Monetary Economics, Elsevier, vol. 29(3), pages 371-388, June.
    8. Holland, A Steven, 1988. "The Changing Responsiveness of Wages to Price-Level Shocks: Explicit and Implicit Indexation," Economic Inquiry, Western Economic Association International, vol. 26(2), pages 265-79, April.
    9. Alogoskoufis, George S & Smith, Ron, 1991. "The Phillips Curve, the Persistence of Inflation, and the Lucas Critique: Evidence from Exchange-Rate Regimes," American Economic Review, American Economic Association, vol. 81(5), pages 1254-75, December.
    10. Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 231-254.
    11. Engle, Robert F & Granger, Clive W J, 1987. "Co-integration and Error Correction: Representation, Estimation, and Testing," Econometrica, Econometric Society, vol. 55(2), pages 251-76, March.
    12. Danziger, Leif, 1984. " Stochastic Inflation and Wage Indexation," Scandinavian Journal of Economics, Wiley Blackwell, vol. 86(3), pages 326-36.
    13. Evans, Martin, 1991. "Discovering the Link between Inflation Rates and Inflation Uncertainty," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 23(2), pages 169-84, May.
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