Some macroeconomic implications of wage indexation: a survey

The stylized model of the small, open economy has been the subject of a great deal of theoretical analysis. At the empirical level, of course, there are important differences in the economic position and policy experience of individual countries. At least four differences seem to be of major importance: degree of openness, vulnerability to particular kinds of external shocks, institutional factors, and policy responses. Obviously, it is of considerable potential interest to compare the experience of different countries with a view to learning the lessons of developments over the past fifteen years. In particular, it is useful to see to what extent rigidities-caused by institutional factors, behavioural patterns or past policy measures-have influenced the adjustment process and thereby either hampered or facilitated the implementation of effective policies. People have chosen for this purpose four countries: Austria, Canada and Sweden a more or less random selection of open economies whose experience, though similar in some respects, has differed widely in others.