As I was, at the time, involved in econometric modelling at the Bank of Italy, paying special attention to the effects of price indexation and inflation expectations, I would just like to recall the main results of our investigations.
Basically, changes in unemployment appeared to have a significant, even if not exceptional, impact on nominal wages, though a permanent trade-off between unemployment and wage inflation was ruled out by the data. Expected inflation only influenced wage changes in the short term, but wages caught up quite rapidly with respect to previous errors in anticipating inflation.