When prices are likely to be pushed up due to increase of indirect taxes or adverse terms-of-trade shocks, the surge in prices must be cancelled out by decline in domestic money wage costs, as long as such a price stability policy is adopted.
22.
This meant in practice that money wages rose faster than the cost of living, because better-paid groups fought for extra sums to maintain their differentials, and also because various industries negotiated local and national wage deals in addition to the increments that all workers received.
23.
A major one is that money wages are set by " bilateral negotiations " under partial bilateral monopoly : as the unemployment rate rises, " all else constant " worker bargaining power falls, so that workers are less able to increase their wages in the face of employer resistance.
24.
Inflation was around 4 per cent, money wages rose from an average of ? a week in 1951 to ?5 a week by 1961, home-ownership spread from 35 per cent in 1939 to 47 per cent by 1966, and the relaxation of credit controls boosted the demand for consumer goods ."
