This paper investigates the effects of wage indexation on the time-consistent level of inflation. Departing from … previous work on time-consistent policy, we study a structural model of the economy. Indexation reduces the cost of inflation … raise inflation but also to raise welfare: the loss from higher inflation is outweighed by the gain from greater protection …

were large relative both to the level and trend of the expected rate of average wage inflation and to the existing relative … implies that, if the year-to-year variation in expected wage inflation were large relative to the year-to-year variation in … unexpected wage inflation, indexation would increase the year-to-year variation in minimum-wage employment …

This paper deals with the relationship between inflation targeting and exchange rates. I address three specific issues …: first, I analyze the effectiveness of nominal exchange rates as shock absorbers in countries with inflation targeting. This … volatility is different in countries with an inflation targeting regime than in countries with alternative monetary policy …

hypotheses analyzed are: (i) the supply-side effects associated with an inflation decline; (ii) the perception that the exchange …