Abstract
The paper introduces a wage indexation rule into a bargaining framework, and shows that increasing indexation and decreasing competition among firms affects the price level and nominal wage positively. The macroeconomic implication is that there is room for active macroeconomic policies to stabilise output and employment, avoiding or minimising the effects of indexation.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have