This paper rationalizes the absence of positive wage indexation in labour contracts--that is, of indexing provisions that link wage increases to inflation. We investigate the equilibrium of a policy game in a stochastic economy in which wage-setters and a policy-maker interact strategically in...

This book focuses on Japan's recent recovery from a decade-long stagnation, with particular attention to the unfinished policy agenda and the international spillovers of Japan's policies, through background studies (both analytical and descriptive) by IMF economists.

Literature concerning the transactions theory of demand for money often contains the assumption that simple trigger-target rules are optimal when each financial transaction is accompanied by a fixed cost. The validity of this assumption is examined in this paper. Using a simple example, it is...

This paper presents an extension of the life cycle permanent-income model of consumption to the case of a durable good whose purchase involves limpy transactions costs. By integrating the advancement/postponement decision in the individual's analysis, the implications of the model are different...

We use traffic data from a series of experiments in the United States and Israel to examine how illegal behavior is deterred by various penalty schemes and whether deterrence varies with age, income, driving record and criminal record. We find that red light running decreases sharply in response...

This paper presents an extension of the life-cycle permanent-income model of consumption to the case of a durable good whose purchase involves lumpy trans- actions costs. Where individual behavior is concerned, the implications of the model are different in some respects from those of standard...