Discrete exchange rate changes with real wage resistance
Fixed exchange rate policy is examined when money wages are determined by collective bargaining for fixed periods. The main results are as follows. If the interest elasticity of aggregate demand is high and the contract periods in the labour market are long, then in the short run, a devaluation produces expansion but in the long run, contraction. Expectations on a future devaluation cause expansion before the occurrence of the devaluation and at the moment of the occurrence, domestic expenditure falls discontinuously.
Volume (Year): 5 (1992)
Issue (Month): 1 (Spring)
|Contact details of provider:|| Web page: http://www.taloustieteellinenyhdistys.fi|
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:fep:journl:v:5:y:1992:i:1:p:38-46. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Editorial Secretary)
If references are entirely missing, you can add them using this form.