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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Jon Stept who wrote (13925)	5/14/1999 2:16:00 PM
From: pater tenebrarum	Respond to of 99985

Jon, with regards to wage inflation, many economists argue that wages should lead prices and therefore the absence of wage inflation is often cited as a sign that no inflationary pressures are present in the economy. a minority of economists argues otherwise, namely that rising prices will lead to higher wage demands, thus initiating the dreaded inflationary spiral. i find there is a lot of merit in this argument, as companies will find it hard to fend off rising wage demands due to the tightness of the labor market and workers, feeling the pinch of higher prices will be more inclined to raise their wage demands. regards, hb