When Do Wages Increase Too Much?

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The simple answer to the question in the headline is that wages (1) increase too much if they increase more than the growth in labor productivity plus the Central Bank's inflation target of 2.5%. A box in the Central Bank's Monetary Bulletin No. 2, 2026, on wage increases consistent with the inflation target points out that productivity has grown by 1.2% per year over the past 20 years and that this is normal...