Research
BPEA | 1997 No. 1Public Resistance to Indexation: A Puzzle
Robert J. Shiller
Robert J. Shiller
Sterling Professor of Economics
- Yale University
Discussants:
Charles L. Schultze and
Charles L. Schultze
Former Brookings Expert
Robert E. Hall
Robert E. Hall
Robert and Carole McNeil Joint Hoover Senior Fellow and Professor of Economics
- Stanford University
Robert J. Shiller
Sterling Professor of Economics
- Yale University
Charles L. Schultze
Former Brookings Expert
Robert E. Hall
Robert and Carole McNeil Joint Hoover Senior Fellow and Professor of Economics
- Stanford University
1997, No. 1
THE INDEXATION OF payments makes excellent sense for all sorts of
long-term contracts. Future payments should not be expressed in currency
units, but instead tied to an index of consumer prices or an index
of wholesale prices, of wages, of incomes, or of components of income.
History shows that the real value of currency units has been so unstable
that it is better to use practically any one of these indexes to specify
future payments in contracts than to specify payments in terms of fixed
currency.