Working Papers, Department of Economics, Lund University
MONETARY REGIMES AND ENDOGENOUS WAGE CONTRACTS: SWEDEN 1908-1995
() and Lars Jonung
Abstract: We examine Gray´s theory of endogenous length of wage
contracts and inflation indexation, using a uniquely long data set of
blue-collar worker collective agreements in Sweden 1908-1995. Volatile
monetary regimes, i. e. regimes with large macroeconomic uncertainty, are
associated with short length and inflation indexed contracts. We also find
inertia in changes in contract characteristics to changes in the regime.
The findings support the Lucas critique, but cautions against simple
divisions of time series in different regimes wherein agents' decision
rules are assumed constant.
Keywords: Monetary regime; contract length; wage indexation; Lucas critique; (follow links to similar papers)
JEL-Codes: E30; E42; E65; (follow links to similar papers)
30 pages, June 1, 1998, Revised April 21, 1999
- This paper is published as:
Fregert, Klas and Lars Jonung, (2008), 'Inflation Targeting Is a Success, So Far: 100 Years of Evidence from Swedish Wage Contracts', Economics: The Open-Access, Open-Assessment E-Journal, Vol. 2, No. 2008-31, pages 1-25
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