The expectation system and the wage policy: indexation x prefixing

César Costa Alves de Mattos ()

Brazilian Journal of Political Economy, 1993, vol. 13, issue 2, 314-320

Abstract: This article intends to compare wage policies based upon conventional indexationon past inflation schemes versus pre-fixation ones. The structure of responses of theeconomic agents to wage policy will be significantly different in each other of these twoapproaches, and it will be crucial to determine the possibilities of the success of that strategyas an anti-inflationary one. Otherwise, the principal focus of that work will be the wage pre--fixation scheme and its relationship with the expectations of economic agents. The crucialissue to be analyzed will be the credibility of the government with respect the workers andtheir unions in general. ln some contexts, the lack of credibility of the government will leadthe wage policy to be almost irrelevant in the effective wage fixing of economy. Toe principalconclusion will be that pre-fixation will be a risky alternative but may be the most attractiveway of fighting inflation in countries with chronic inflationary situations like Brazil. JEL Classification: E31; J31; J33.

Keywords: Inflation; wage policy (search for similar items in EconPapers)
Date: 1993
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