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Fixed Wage Contracts and Monetary Non-Neutrality

Maria Björklund (), Mikael Carlsson () and Oskar Skans
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Maria Björklund: Uppsala University

No 368, Working Paper Series from Sveriges Riksbank (Central Bank of Sweden)

Abstract: We study the importance of wage rigidities for the monetary policy transmission mechanism. Using uniquely rich micro data on Swedish wage negotiations, we isolate periods when the labor market is covered by fixed wage contracts. Importantly, negotiations are coordinated in time but their seasonal patterns are far from deterministic. Using a two-regime VAR model, we document that monetary policy shocks have a larger impact on production during fixed wage episodes as compared to the average response. The results are not driven by the periodic structure, nor the seasonality, of the renegotiation episodes.

Keywords: Monetary Policy; Wages; Nominal rigidities; Micro-data (search for similar items in EconPapers)
JEL-codes: E23 E24 E58 J41 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2019-03-01
New Economics Papers: this item is included in nep-mac and nep-mon
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Related works:
Journal Article: Fixed-Wage Contracts and Monetary Non-neutrality (2019) Downloads
Working Paper: Fixed wage contracts and monetary non-neutrality (2016) Downloads
Working Paper: Fixed Wage Contracts and Monetary Non-Neutrality (2016) Downloads
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