01982cas a2200241 a 4500 AALejournalIMF008120 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451849509 1018-5941 BD-DhAAL BD-DhAAL Milesi-Ferretti, Gian. Wage Claims, Incomes Policy, and the Path of Output and Inflation in a Formerly Centrally Planned Economy / Gian Milesi-Ferretti. Washington, D.C. : International Monetary Fund, 1992. 1 online resource (52 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students The corporate governance problem of state enterprises in former socialist economies can give rise to excessive wage claims and/or capital decumulation. This paper focuses on these problems, highlighting the dynamic links between wage behavior, the fiscal deficit, inflation and the capital stock. Wage controls have been widely advocated as a response to the corporate governance problem. We show that in the presence of excessive wage claims a system of wage controls can help to limit capital decumulation and reduce inflation, since wage moderation implies higher government revenues from the profit tax and therefore lower money creation. More specifically, it is shown that when wage levels are initially excessive a reduction in the degree of wage indexation is effective in lowering inflation if nominal wages do not provide, on average, full protection against future inflation. Mode of access: Internet IMF Working Papers; Working Paper ; No. 1992/074 Full text available on IMF http://elibrary.imf.org/view/journals/001/1992/074/001.1992.issue-074-en.xml IMF e-Library