Skip to main content
SpringerLink
Log in

Inertial linkages between wages and inflation: Evidence from Brazil

  • Articles
  • Published:
Atlantic Economic Journal Aims and scope Submit manuscript

Abstract

Many observers of the Brazilian economy have suggested that wage growth causes inflation. Because wage growth is linked to past price growth, an inertial component is said to exist. The relationship between wage growth and inflation in Brazil over the period 1981–89 is examined. A model of wage growth and inflation is developed. Lagged effects of inflation on wage growth and a structural break in 1986 are tested for. The estimates suggest a lagged response of wages to prices in the pre-1986 period. However, in the post-1986 period, the response of wages to lagged inflation is not statistically different from zero and the contemporaneous response is not different from one.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

References

  • Bresser Pereira, Luis C.; Nakano, Yoshiaki.The Theory of Inertial Inflation, Boulder: Lynne Rienner Publishers, 1987.

    Google Scholar 

  • Brooke, James. "Economy of Brazil Still Ails,"New York Times, December 3, 1990.

  • Conjuntura Economica, Rio de Janeiro, Brazil: Fundação Getulio Vargas, various issues.

  • Cardoso, E. "Comment," in Bruno, Di Tella, Dornbusch, and Fischer, eds.,Inflation Stabilization: The Experience of Israel, Argentina, Brazil, Bolivia, and Mexico, Cambridge: MIT Press, 1989, pp. 287–94.

    Google Scholar 

  • Cardoso, E.; Fishlow, A.The Macroeconomics of Brazilian External Debt, Cambridge: NBER, 1988.

    Google Scholar 

  • Dornbusch, R.; Strunznegger, F.; Wolf, H. "Extreme Inflation: Dynamics and Stabilization,"Brookings Papers on Economic Activity, 2, 1990, pp. 1–84.

    Google Scholar 

  • Financial Times, London, various issues.

  • Helpman, E.; Leiderman, L. "Real Wages, Monetary Accommodation, and Inflation,"European Economic Review, 34, 1990, pp. 897–911.

    Article  Google Scholar 

  • Modiano, E. "The Cruzado First Attempt: The Brazilian Stabilization Program of February 1986," in Bruno, Di Tella, Dornbusch, and Fischer, eds.,Inflation Stabilization: The Experience of Israel, Argentina, Brazil, Bolivia, and Mexico, Cambridge: MIT Press, 1989, pp. 215–58.

    Google Scholar 

  • Simonsen, M. H. "Price Stabilization and Income Policies: Theory and the Brazilian Case Study," in Bruno, Di Tella, Dornbusch, and Fischer, eds.,Inflation Stabilization: The Experience of Israel, Argentina, Brazil, Bolivia, and Mexico, Cambridge: MIT Press, 1989, pp. 259–86.

    Google Scholar 

  • Ziera, J. "Inflationary Inertia in a Wage-Price Spiral Model,"European Economic Review, 33, 1989, pp. 1665–83.

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. University of Miami, USA

    Evan Tanner

Authors
  1. Evan Tanner
    View author publications

    You can also search for this author in PubMed Google Scholar

Additional information

A preliminary version of this paper was presented at Fundacão Getulio Vargas and CEBRAP in São Paulo in August 1991. The author wishes to thank Tomàs Malaga, Carola Lame, Gesner Olivera, and Luis Bresser Periera for helpful comments. As well, the author wishes to acknowledge some critical input from Ann Witte and Alejandra Edwards. All errors, however, are the author's own.

Rights and permissions

Reprints and permissions

About this article

Cite this article

Tanner, E. Inertial linkages between wages and inflation: Evidence from Brazil. Atlantic Economic Journal 21, 39–49 (1993). https://doi.org/10.1007/BF02302314

Download citation

  • Issue Date:

  • DOI: https://doi.org/10.1007/BF02302314

Keywords

Search

Navigation