A note on the welfare consequences of wage indexing in a stochastic economy

Méon, Pierre-Guillaume

http://hdl.handle.net/10400.5/15503

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Authors

Méon, Pierre-Guillaume

Abstract(s)

This note surveys the welfare and real consequences of wage indexing in a stochastic economy whose monetary authority lacks credibility. It shows in a unified framework that those consequences might differ markedly depending on the nature and timing of the dominant disturbance in that economy. It finally provides a closed-form expression of the optimal level of wage indexing when all the shocks are taken into account.

Keywords

Monetary policy Credibility Wage indexation

URI

http://hdl.handle.net/10400.5/15503

Citation

Méon, Pierre-Guillaume (2004). "A note on the welfare consequences of wage indexing in a stochastic economy". Portuguese Economic Journal, 3(3):179-187