Contract Duration and Indexation in a Period of Real and Nominal Uncertainty

58 Pages Posted: 21 Aug 2003

See all articles by Louis N. Christofides

Louis N. Christofides

University of Cyprus - Department of Economics; University of Guelph; CESifo (Center for Economic Studies and Ifo Institute for Economic Research); IZA Institute of Labor Economics

Chen Peng

University of Guelph - Department of Economics

Date Written: July 2003

Abstract

A sample of 11885 wage agreements, reached in the Canadian unionized sector during 1976-2000, a period of high as well as exceptionally low inflation and substantial fluctuations in nominal and real uncertainty, is used to study the determinants of key provisions of contracts such as their duration and indexation clauses. Econometric techniques, which account for the interaction between duration and indexation, as well as the latent nature of the elasticity of indexation are used. Results obtained suggest that expected inflation, nominal and real uncertainty account for most of the secular and cyclical changes in contract provisions.

Keywords: Contract Duration, Indexation, Nominal, Real Uncertainty

JEL Classification: E31, J41, J50

Suggested Citation

Christofides, Louis N. and Peng, Chen, Contract Duration and Indexation in a Period of Real and Nominal Uncertainty (July 2003). CESifo Working Paper Series No. 994. Available at SSRN: https://ssrn.com/abstract=432902

Louis N. Christofides (Contact Author)

University of Cyprus - Department of Economics ( email )

75 Kallipoleos Street
P.O. Box 20537
1678 Nicosia
Cyprus
357 22 892448 (Phone)
357 22 892432 (Fax)

University of Guelph ( email )

Guelph, Ontario
Canada
001-519-763-8497 (Phone)

CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Chen Peng

University of Guelph - Department of Economics ( email )

50 Stone Road East
Guelph, Ontario N1G 2W1
Canada

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