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1988•International Economic JournalRequires access

Interest Rates and Wage Indexation

Wookwan Rhee

Open publisher page 1 citations

Abstract

This Paper shows that if wages are indexed to intrest rate and price level in a certain combination the effect of monetary disturbances can be removed. Further, it is shown that the indexation coefficients can be optimally chosen so that the effect of real distrubances on output is minimised. Another intresting result is that the determination of output is not affected by the choice of monetary policy when wage indexation utilizes both prices and interest rates. [020]

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What this paper is about

This Paper shows that if wages are indexed to intrest rate and price level in a certain combination the effect of monetary disturbances can be removed. Further, it is shown that the indexation coefficients can be optimally chosen so that the effect of real distrubances on output is minimised. Another intresting result is that the determination of output is not affected by the choice of monetary policy when wage indexation utilizes both prices and interest rates. [020]

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Available abstract

This Paper shows that if wages are indexed to intrest rate and price level in a certain combination the effect of monetary disturbances can be removed. Further, it is shown that the indexation coefficients can be optimally chosen so that the effect of real distrubances on output is minimised. Another intresting result is that the determination of output is not affected by the choice of monetary policy when wage indexation utilizes both prices and interest rates. [020]

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

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