Aizenman, Joshua; Frenkel, Jacob A. - 2021
elastic than the supply, then policy rules that stabilize employment produce a smaller welfare cost than policy rules that … stabilize the real wage. In that case, indexing wages to nominal GNP results in a smaller welfare cost than indexing to value …-added price index which, in turn, produces a smaller cost than indexation to the CPI. Because of the dual relation between …