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MONETARY REGIMES AND ENDOGENOUS WAGE CONTRACTS: SWEDEN 1908-1995

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Author

Summary, in English

We examine Gray´s theory of endogenous length of wage contracts and inflation indexation, using a uniquely long data set of blue-collar worker collective agreements in Sweden 1908-1995. Volatile monetary regimes, i. e. regimes with large macroeconomic uncertainty, are associated with short length and inflation indexed contracts. We also find inertia in changes in contract characteristics to changes in the regime. The findings support the Lucas critique, but cautions against simple divisions of time series in different regimes wherein agents' decision rules are assumed constant.

Publishing year

1998

Language

English

Document type

Working paper

Topic

  • Economics

Keywords

  • Monetary regime
  • contract length
  • wage indexation
  • Lucas critique

Status

Published