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The Effects of Inflation on Wage Adjustments in Firm-Level Data: Grease or Sand?


An analysis of whether inflation facilitates adjustments to shocks or distorts relative prices, examining the wage-setting process across a panel of occupations and employers and finding that the costs of inflation may rise more rapidly than its benefits beyond quite modest rates of increase in the price level.


Suggested citation: Groshen, Erica, Mark Scweitzer, 1994. “The Effects of Inflation on Wage Adjustments in Firm-Level Data: Grease or Sand?,” Federal Reserve Bank of Cleveland, Working Paper no. 94-18.

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