The expectation system and the wage policy: indexation x prefixing

Vol. 13 No. 2 (1993)

Apr-Jun / 1993
Published April 1, 1993
PDF-Portuguese (Português (Brasil))
PDF-Portuguese (Português (Brasil))

How to Cite

Mattos, César Costa Alves de. 1993. “The Expectation System and the Wage Policy: Indexation X Prefixing”. Brazilian Journal of Political Economy 13 (2):314-20.

The expectation system and the wage policy: indexation x prefixing

César Costa Alves de Mattos
Da Pontifícia Universidade Católica do Rio de Janeiro – PUC-Rio, Rio de Janeiro/RJ, Brasil.
Brazilian Journal of Political Economy, Vol. 13 No. 2 (1993), Apr-Jun / 1993, Pages 314-320


This article intends to compare wage policies based upon conventional indexation
on past inflation schemes versus pre-fixation ones. The structure of responses of the
economic agents to wage policy will be significantly different in each other of these two
approaches, and it will be crucial to determine the possibilities of the success of that strategy
as an anti-inflationary one. Otherwise, the principal focus of that work will be the wage pre-
-fixation scheme and its relationship with the expectations of economic agents. The crucial
issue to be analyzed will be the credibility of the government with respect the workers and
their unions in general. ln some contexts, the lack of credibility of the government will lead
the wage policy to be almost irrelevant in the effective wage fixing of economy. Toe principal
conclusion will be that pre-fixation will be a risky alternative but may be the most attractive
way of fighting inflation in countries with chronic inflationary situations like Brazil.

JEL Classification: E31; J31; J33.

Keywords: Inflation wage policy