In the 1970s, the prevailing view was that nominal wage inflation led to price inflation, largely because of wage “catch up”; i.e., workers and unions demanding additional wage increases to compensate them for unexpected inflation and to match settlements in other sectors of the economy, such as the public sector.
In this context, the setting of wage guidelines by the Anti-Inflation Board was seen as instrumental in controlling inflation. Since then, our research suggests that causality tends to run - at least primarily - from prices to wages, and not the reverse. See Cozier (1992).