Wage contract negotiations often sparked by high inflation: NY Fed paper
The realisation of large inflation forecast errors increases the likelihood that a wage labour contract will be renegotiated, according to a New York Federal Reserve paper, published on Thursday.
Robert Rich and Joseph Tracy, the paper's authors, examine US labour contracts between 1970 and 1995 to investigate whether unanticipated changes in inflation increased the likelihood of a contract being renegotiated prior to its expiration. While existing empirical studies have focused exclusively on
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