Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/159291 
Year of Publication: 
2002
Series/Report no.: 
Quaderni - Working Paper DSE No. 450
Publisher: 
Alma Mater Studiorum - Università di Bologna, Dipartimento di Scienze Economiche (DSE), Bologna
Abstract: 
Nominal wage adjustment is modeled as resulting from bargaining between a risk neutral …rm and a risk averse worker, in an environment where the rate of in‡ation is a random variable. Risk aversion makes for endogenous indexation arrangements, which deliver partial indexation as they exploit imperfect in‡ation indices; risk aversion also generates a positive correlation between indexation and in‡ation variance. The model suggests a distinction between complete vs incomplete in‡ation adjustment on the one hand, and perfect vs imperfect adjustment on the other hand.
Persistent Identifier of the first edition: 
Creative Commons License: 
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Document Type: 
Working Paper

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