TY  - JOUR
AU  - Marston,Richard C.
AU  - Turnovsky,Stephen J.
TI  - Imported Materials Prices, Wage Policy, and Macroeconomic Stabilization
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 1254
PY  - 1985
Y2  - October 1985
UR  - http://www.nber.org/papers/w1254
L1  - http://www.nber.org/papers/w1254.pdf
N1  - Author contact info:
Richard C. Marston
Department of Finance, Wharton School
University of Pennsylvania, 2300 Steinberg-Dietric
3620 Locust Walk
Philadelphia, PA  19104-6367
Tel: 215/898-7626
Fax: 215/573-2242
E-Mail: marstonr@wharton.upenn.edu

Stephen Turnovsky
Department of Economics
301 Savery Hall; Mail Stop DK 30
University of Washington
Seattle, WA   98195
Tel: 206-545-8028
E-Mail: sturn@u.washington.edu
AB  - This paper analyzes two simple wage rules that keep employment constant when there are shocks to the prices of imported materials. One rule ties nominal wages to the GNP deflator rather than the consumer price index. The second rule, followed by Japan after the second oil price shock, ties the real wage to real GNP. The paper shows the effects on output, real income, and other macroeconomic variables of choosing either rule in place of the real wage stability provided by conventional wage indexation.
ER  -