Inflation and the response of public wages in the euro area

Cristina Checherita-Westphal and Aurelian Vlad
Authors registered in the RePEc Author Service: Cristina Checherita Westphal

Economic Bulletin Boxes, 2023, vol. 5

Abstract: This box reviews Eurosystem staff projections of public wages, focusing on their response to inflation. It concludes that, after experiencing a large cut in real terms in 2022, public wages are projected to grow cumulatively over the period 2023-25 at rates higher than inflation. It also shows that projections of public wages reflect substantial heterogeneity at country level. Projected nominal public wage growth is stronger in countries that have experienced high levels of inflation in the recent past, even in the absence of institutional arrangements for automatic price indexation of public wages, but is more restrained in countries with high levels of public debt. JEL Classification: E62, J3, H55

Keywords: fiscal policy; fiscal projections; public wages (search for similar items in EconPapers)
Date: 2023-08
Note: 1790315
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Persistent link: https://EconPapers.repec.org/RePEc:ecb:ecbbox:2023:0005:8

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