Wage indexation and the exchange rate regime: a strategic analysis

Article Abstract:

An open-economy macroeconomic model, which analyzed the strategic interaction between a government and a trade union in an incomplete information environment, showed that the degree of wage indexation of a trade union is correlated to the inflation aversion of its government. The study also showed that fixed exchange rates reduced inflation uncertainty and wage indexation when the union is uncertain of its government's policy. The study further suggested application of the model to analyze the impact of exchange rate policy change to wage indexation in other countries.

Administration of General Economic Programs, Economics, Research and Development in the Social Sciences and Humanities, Currency Stabilization Programs, Research, Inflation (Finance), Wages, Wages and salaries, Currency stabilization, Indexation (Economics), Foreign exchange market, Inflation (Economics)

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The effect of changing monetary policy regimes on stock prices

Article Abstract:

Agents' expectations of the Federal Reserve's reaction to the deviation of the actual money supply from prespecified target is the main factor behind the magnitude of the time-varying response of stock prices to an unanticipated money announcement. This was gleaned from an examination of the relationship between money announcements and stock prices, using data from Oct. 1977 to Dec. 1984. Results indicate that the extent of the response of stock prices to money announcements hinges on expectations about future monetary policy actions.

Securities and Commodity Exchanges, Security and commodity exchanges, Securities Exchanges, Prices and rates, Stocks, Stock-exchange, Stock exchanges, Exchanges, Monetary policy, Stock prices, Stock price forecasting

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