Monetary policy in the presence of asymmetric wage indexation

Giuseppe Diana and Pierre-Guillaume Méon

Working Papers of LaRGE (Laboratoire de Recherche en Gestion et Economie) from Laboratoire de Recherche en Gestion et Economie, Université de Strasbourg (France)

Abstract: We study optimal monetary policy in the presence of asymmetric wage indexation. We find that the monetary authorities do not react to small output shocks and that their reaction to large shocks is asymmetric, insofar as they absorb positive shocks more than negative ones. As a consequence, we observe that asymmetric wage indexation can be recessionary and that it decreases the inflationary bias relative to an equivalent symmetric indexation.

Keywords: Monetary policy; wage indexation. (search for similar items in EconPapers)
JEL-codes: E30 E50 E61 J30 (search for similar items in EconPapers)
Date: 2003
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Related works:
Working Paper: Monetary policy in the presence of asymmetric wage indexation (2005)
Journal Article: Monetary Policy in the Presence of Asymmetric Wage Indexation (2008)
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Persistent link: http://EconPapers.repec.org/RePEc:lar:wpaper:2003-06

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