THE CHANGING RESPONSIVENESS OF WAGES TO PRICE‐LEVEL SHOCKS: EXPLICIT AND IMPLICIT INDEXATION
- 1 April 1988
- journal article
- Published by Wiley in Economic Inquiry
- Vol. 26 (2) , 265-279
- https://doi.org/10.1111/j.1465-7295.1988.tb01493.x
Abstract
The article provides evidence for the U.S over the period 1961‐84 that the responsiveness of nonunion wages to price‐level shocks changes through time much as the degree of indexation in union contracts does, suggesting that there exists implicit as well as explicit indexation. When coupled with the result from previous research that indexation responds positively to inflation uncertainty, the findings indicate that greater inflation uncertainty may lead to reduced overall wage rigidity. In the context of a rational expectations model with long‐term wage contracts, a decline in the effectiveness of an activist monetary policy could result.This publication has 16 references indexed in Scilit:
- Long-term contracts, expectations and wage inertiaJournal of Monetary Economics, 1985
- ANTICIPATED COUNTER‐CYCLICAL MONETARY POLICYEconomic Inquiry, 1984
- A Test of Price Sluggishness in the Simple Rational Expectations Model: U.K. 1950-1980The Economic Journal, 1983
- The effects of wage indexation on macroeconomic fluctuations: A generalizationJournal of Monetary Economics, 1980
- Anticipations and the Nonneutrality of MoneyJournal of Political Economy, 1979
- Wages, Profits, and Macroeconomic Adjustment: A Comparative StudyBrookings Papers on Economic Activity, 1979
- Nobel Lecture: Inflation and UnemploymentJournal of Political Economy, 1977
- Stabilizing Powers of Monetary Policy under Rational ExpectationsJournal of Political Economy, 1977
- Wage indexation: A macroeconomic approachJournal of Monetary Economics, 1976
- An Equilibrium Model of the Business CycleJournal of Political Economy, 1975