Year: 1988
Author: Adolph, Brigitte, Wolfstetter, Elmar
Journal of Contextual Economics – Schmollers Jahrbuch, Vol. 108 (1988), Iss. 3 : pp. 335–353
Abstract
The novelty of this paper is that wage-price-indexation is viewed as a statistical inference problem - from observable prices to productivity. Indexation serves the allocation of risk. The market equilibrium exhibits full indexation whenever prices are uninformative. In turn, partial indexation results if observing a higher price allows the inference that productivity has reached a lower level, in the sense of firstdegree stochastic dominance. With informative prices, increased monetary volatility leads to lower social welfare. The statistical inference from prices to productivity is blurred; hence, indexation is less fit to control the allocation of risk.
Journal Article Details
Publisher Name: Global Science Press
Language: Multiple languages
DOI: https://doi.org/10.3790/schm.108.3.335
Journal of Contextual Economics – Schmollers Jahrbuch, Vol. 108 (1988), Iss. 3 : pp. 335–353
Published online: 1988-03
AMS Subject Headings: Duncker & Humblot
Copyright: COPYRIGHT: © Global Science Press
Pages: 19