## Wage Indexation and the Cost of Disinflation

_IMF Working Papers, May 1, 1996_

## Source details

**Canonical URL:** [Wage Indexation and the Cost of Disinflation](https://www.imf.org/en/publications/wp/issues/2016/12/30/wage-indexation-and-the-cost-of-disinflation-1894)

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## Bibliographic details
- Authors: Esteban Jadresic
- Published: May 1, 1996
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451846690.001

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### Summary and central finding
- While a standard academic presumption has been that wage indexation reduces the cost of disinflation, policymakers generally contend that wage indexing makes disinflation more difficult.
- The paper reexamines the effects of wage indexing on the output loss caused by money-based stabilization.
- Principal finding: the cost of disinflation with indexed wage contracts tends to be smaller than that with contracts that specify preset time-varying wages, but larger than that with contracts that specify fixed wages.
- Concluding interpretation: the academic and policymakers views can be both appropriate depending on the standard of reference.

### Subjects and keywords
- Subject: Disinflation, Inflation, Labor, Prices, Wage adjustments, Wage indexation, Wages
- Keywords: cost of disinflation, cost of living, Disinflation, disinflation policy, Eastern Europe, indexation rule, indexed contract, indexed economy, Inflation, inflation rate, Wage adjustments, wage contract, Wage indexation, Wages, WP

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/30/wage-indexation-and-the-cost-of-disinflation-1894_