Wage Contracts, Sticky Prices and Exchange Rate Volatility: Evidence from Nine Industrial Countries

Jerome Fahrer
Additional contact information
Jerome Fahrer: Reserve Bank of Australia

RBA Research Discussion Papers from Reserve Bank of Australia

Abstract: In this paper, I investigate the link between real wage rigidities, nominal wage and price rigidities, and nominal exchange rate volatility. Using a model of overlapping wage contracts and monopolistic price-setting, where prices are costly to change, I find sticky nominal prices and wages to be a feature of all the major industrialised countries. However, I also find real wage rigidities to be absent for most of these countries. In the face of rigidities to nominal wages and prices, flexibility in the real product wage comes about through the dynamics of prices, wages and exchange rates, and the indexation of wages to consumer prices.

Date: 1990-11
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.rba.gov.au/publications/rdp/1990/9006.html

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:rba:rbardp:rdp9006

Access Statistics for this paper

More papers in RBA Research Discussion Papers from Reserve Bank of Australia Contact information at EDIRC.
Bibliographic data for series maintained by Paula Drew ().