Monetary policy in the presence of asymmetric wage indexation

We study optimal monetary policy in the presence of asymmetric wage indexation. We find that the monetary authorities do not react to small output shocks and that their reaction to large shocks is asymmetric, insofar as they absorb positive shocks more than negative ones. As a consequence, we observe that asymmetric wage indexation can be recessionary and that it decreases the inflationary bias relative to an equivalent symmetric indexation.

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Year of publication:	2003
Authors:	Diana, Giuseppe ; Méon, Pierre-Guillaume
Institutions:	Laboratoire de Recherche en Gestion (LaRGE), Institut de Finance de Strasbourg
Subject:	Monetary policy \| wage indexation

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Extent:	application/pdf
Series:	Working Papers of LaRGE Research Center.
Type of publication:	Book / Working Paper
Language:	English
Classification:	E30 - Prices, Business Fluctuations, and Cycles. General ; E50 - Monetary Policy, Central Banking and the Supply of Money and Credit. General ; E61 - Policy Objectives; Policy Designs and Consistency; Policy Coordination ; J30 - Wages, Compensation, and Labor Costs. General
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005811642