Indexation Rules, Risk Aversion, and Imperfect Information

Benassi, Corrado ; Scorcu, Antonello (2002) Indexation Rules, Risk Aversion, and Imperfect Information. Bologna: Dipartimento di Scienze economiche DSE, p. 11. DOI 10.6092/unibo/amsacta/4845. In: Quaderni - Working Paper DSE (450). ISSN 2282-6483.
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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.

Abstract
Document type
Monograph (Working Paper)
Creators
CreatorsAffiliationORCID
Benassi, Corrado
Scorcu, Antonello
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ISSN
2282-6483
DOI
Deposit date
14 Mar 2016 15:58
Last modified
14 Mar 2016 15:58
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