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Working Paper

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.

Working Papers of the Federal Reserve Bank of Cleveland are preliminary materials circulated to stimulate discussion and critical comment on research in progress. They may not have been subject to the formal editorial review accorded official Federal Reserve Bank of Cleveland publications. The views expressed in this paper are those of the authors and do not represent the views of the Federal Reserve Bank of Cleveland or the Federal Reserve System.


Suggested Citation

Groshen, Erica, and Mark E. Schweitzer. 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. https://doi.org/10.26509/frbc-wp-199418