. Nonetheless, until recently, this research had not explicitly explored the implications of contracts that index wages to lagged … inflation, the usual type of wage indexation observed in practice. Drawing mainly on recent research by the author, this paper … examines the consequences of wage indexation to lagged inflation on aggregate wage formation, the cost of disinflation under …

In models with complete markets, targeting core inflation enables monetary policy to maximize welfare by replicating …-maximizing central bank should adopt flexible headline inflation targeting a target for headline CPI inflation with some weight on the …

literature has been that indexing wages stabilizes output when shocks are nominal and destabilizes output when shocks are real … lagged inflation tend to destabilize output regardless of whether shocks are nominal or real …

For a sample of US industries, nominal wage and price inflation follow aggregate price inflation closely during … contras to producers’ attempt to maintain, or even increase, industrial real price inflation during recessions. Consistently …

indexed wage contracts tends to be smaller than that with contracts that specify preset time-varying wages, but larger than … that with contracts that specify fixed wages. Thus the academic and policymakers views can be both appropriate depending on …

The Fiscal Theory of the Price Level (FTPL) is the claim that, in a popular class of theoretical models, the price …

highlighted by different strands of the literature: sticky prices, sticky wages, distribution costs, and a combination of local …