Policy rule evaluation by contract-makers: 100 years of wage contract length in Sweden

Klas Fregert and Lars Jonung ()

No 270, European Economy - Economic Papers 2008 - 2015 from Directorate General Economic and Financial Affairs (DG ECFIN), European Commission

Abstract: The length of collective wage agreements in Sweden between 1908 and 2005 is explored to evaluate a variety of policy regimes from the wage contract-makers' perspective. Adopting a new long-run test, it is found that wage contract length decreases in response to an increase in †macroeconomic uncertainty†across policy regimes. There is also substantial short-run variation in contract length, which cautions against regime divisions based solely on the policy rule. The inflation targeting regime 1995-2005 stands out as an exceptionally stable policy regime as judged by the willingness of contract-makers to repeatedly commit to three-year non-indexed wage agreements. The results are based on a data base on collective wage agreements unique in international comparisons in terms of length and coverage.

Keywords: Policy regime; contract length; wage indexation; Lucas critique; Sweden; credibility; inflation targeting; Fregert; Jonung (search for similar items in EconPapers)
Pages: 34 pages
Date: 2007-01
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Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:euf:ecopap:0270

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