Indexation

Abstract

Over the past year or so increasing attention has been paid to the possibility of introducing indexation of economic variables, and especially of wage rates as a supplementary form of inflation control. This interest in indexation stems in part from the adoption of threshold agreements under Stage 3 of the Counter-Inflation Act, and in part from a growing feeling that inflation cannot be suppressed and that the best thing to do in the circumstances is to learn to live with it as best one can. Indexation currently forms a part of the Monetarist platform for inflationary control,¹ and has been widely advocated in its own right.² It is therefore necessary at this point to give the question of indexation careful consideration.