Aversion to price variability and the optimal degree of wage indexation

Avner Bar-Ilan, Alessandro Zanello

Research output: Contribution to journalArticlepeer-review


In this paper we explore possible explanations for the observed low amount of wage indexation. We first consider the notion that the stochastic structure of the economy may offer a rationalization for this observation, and argue that this does not seem likely. We next suggest that a preference for price stability may playa role in wage determination. A low degree of indexation is chosen because it reduces the variability of prices.

Original languageEnglish
Pages (from-to)197-201
Number of pages5
JournalEconomics Letters
Issue number2
StatePublished - Oct 1991
Externally publishedYes

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics


Dive into the research topics of 'Aversion to price variability and the optimal degree of wage indexation'. Together they form a unique fingerprint.

Cite this