Indexation Rules, Risk Aversion, and Imperfect Information

Benassi, Corrado ; Antonello E., Scorcu (2003) Indexation Rules, Risk Aversion, and Imperfect Information. DOI 10.6092/unibo/amsacta/640.
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Abstract

Nominal wage adjustment is modeled as resulting from bargaining between a risk neutral firm and a risk averse worker, in an environment where the rate of inflation is a random variable. Risk aversion makes for endogenous indexation arrangements, which deliver partial indexation as they exploit imperfect inflation indices; risk aversion also generates a positive correlation between indexation and inflation variance. The model suggests a distinction between complete vs incomplete inflation adjustment on the one hand, and perfect vs imperfect adjustment on the other hand.

Abstract
Document type
Monograph (Working Paper)
Creators
CreatorsAffiliationORCID
Benassi, Corrado
Antonello E., Scorcu
Subjects
DOI
Deposit date
17 Jun 2004
Last modified
17 Feb 2016 13:59
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