Wages, inflation and distributive conflict: reflections on the sliding scale

Abstract

This article tries to show some of the potential problems that appear with the
adoption of the automatic mechanism of wage increase known as “trigger point indexation”.
Theories about distributive conflict are the basis to describe the way the inflationary dynamic
behaves in a system of wage periodical indexation, which is compared with the “trigger
point “ system. The main conclusion is that if the government don’t manage to control prices
strictly, the menace of an acceleration of inflation is considerable. ln this context, the article
also discusses some of the different sceneries for the Brazilian economy that may be foreseen
for the next future as a consequence of the conflicts observed now.

JEL Classification: J38; J31.