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1987•European Economic ReviewOpen access

Inflation and wage indexation with multiperiod contracts

Avia Spivak, J. Weinblatt, Ben‐Zion Zilberfarb

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Abstract

This paper deals with the impact of wage indexation on the rate of inflation in two alternative institutional settings: simultaneous and overlapping multiperiod contracts. The results show that in the case of simultaneous contracts, the degree of indexation determines the timing of price changes but not its intercontract magnitude. When contracts are overlapping and uniformly distributed over time, indexation always increases the absolute rate of inflation and its variability.

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What this paper is about

This paper deals with the impact of wage indexation on the rate of inflation in two alternative institutional settings: simultaneous and overlapping multiperiod contracts. The results show that in the case of simultaneous contracts, the degree of indexation determines the timing of price changes but not its intercontract magnitude. When contracts are overlapping and uniformly distributed over time, indexation always increases the absolute rate of inflation and its variability.

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OpenAlex reports 6 citations for this work. Citation counts describe recorded attention and do not establish research quality.

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Available abstract

This paper deals with the impact of wage indexation on the rate of inflation in two alternative institutional settings: simultaneous and overlapping multiperiod contracts. The results show that in the case of simultaneous contracts, the degree of indexation determines the timing of price changes but not its intercontract magnitude. When contracts are overlapping and uniformly distributed over time, indexation always increases the absolute rate of inflation and its variability.

Key concepts: Indexation, Economics, Wage, Inflation (cosmology), Monetary economics, Inflation rate, Econometrics, Monetary policy

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