Inflation can "grease" the wheels of the labor market by relaxing downward wage rigidity but it can also increase uncertainty and have a negative "sand" effect. This paper studies the grease effect of inflation by looking at whether the interaction between inflation and labor market regulations...

This paper is based on a report commissioned by UNCTAD to serve as an input for the 1986 Trade and Development Report. The views expressed here within are solely those of the authors. Furthermore, the publication of this report should in no way be interpreted as official sanctioning or approval...