Diana, Giuseppe; Méon, Pierre-Guillaume - In: Southern Economic Journal 75 (2008) 1, pp. 69-90
We study optimal monetary policy in the presence of asymmetric wage indexation. We find that the monetary authorities do not react to small output shocks, and that their reaction to large shocks is asymmetric, insofar as they absorb positive shocks more than negative ones. As a consequence, we...