A Model of Nominal Contracts
1989 (English)Report (Other academic)
A simple macroeconomic model with labor contracts is formulated. Under plausible conditions, i) the optimal labor contract leaves employment to be determined by the firm, ii) a small cost for writing a state-contingent contract may be sufficient to induce forms and insiders to write contracts with fixed nominal wages, so that iii) fluctuations in nominal demand lead to variations in output and employment.
Place, publisher, year, edition, pages
Stockholm: IIES , 1989. , 29 p.
Seminar Paper / Institute for International Economic Studies, Stockholm University, ISSN 0347-8769 ; 455
IdentifiersURN: urn:nbn:se:su:diva-41758OAI: oai:DiVA.org:su-41758DiVA: diva2:337669