MONETARY REGIMES AND ENDOGENOUS WAGE CONTRACTS: SWEDEN 1908-1995

Klas Fregert () and Lars Jonung ()

No 1998:3, Working Papers from Lund University, Department of Economics

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 (search for similar items in EconPapers)
JEL-codes: E30 E42 E65 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-his and nep-lab
Date: 1998-06-01, Revised 1999-04-21
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Published in Economics: The Open-Access, Open-Assessment E-Journal, 2008, pages 1-25.

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