TY  - JOUR
AU  - Turnovsky,Stephen J.
TI  - Optimal Monetary Policy and Wage Indexation Under Alternative Disturbances and Information Structures
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 2042
PY  - 1987
Y2  - August 1987
UR  - http://www.nber.org/papers/w2042
L1  - http://www.nber.org/papers/w2042.pdf
N1  - Author contact info:
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  - The interdependence between the optimal degree of wage indexation and optimal monetary policy is analyzed for a small open economy under a variety of assumptions regarding: (i) relative information available to private agents and the stabilization authority; (ii) the perceived nature of the disturbances impinging on the economy. The distinctions between: (a) unanticipated and anticipated disturbances, and (b) permanent and transitory disturbances, are emphasized. The extent to which stabilization is achieved is shown to depend upon the nature of the disturbances and the available information. The policy redundancy issue is emphasized, implying that optimal rules can frequently be specified in many equivalent ways.
ER  -