Wage‑indexed constitutions raise borrowing costs

When a constitution or binding law indexes public wages, pensions and benefits to inflation and minimum‑wage rules, it can lock in rising mandatory spending and perpetuate inflationary expectations. That combination depresses private saving and forces central banks to maintain very high real policy rates, raising the economy’s cost of capital and undermining investment. — This frames constitutional design as a direct macroeconomic lever: countries with entrenched nominal entitlements face politically hardened fiscal paths that can raise real rates and stunt growth, making constitutional reform a central economic policy issue.