IDEAS home Printed from https://ideas.repec.org/a/oup/restud/v55y1988i3p431-446..html
   My bibliography  Save this article

Money and Contracts

Author

Listed:
  • Roger E. A. Farmer

Abstract

This paper presents a novel interpretation of the fact that high nominal interest rates accompany low levels of real GNP. It constructs a model in which money and bonds are both held as a result of legal restrictions on the banking system. Open market operations may increase the equilibrium rate of interest and raise the cost of credit. This increase in the cost of credit causes firms to write labour contracts in which layoffs occur more frequently. The nature of optimal labour contracts is derived explicitly from assumptions about the information that is available to firms and to workers.

Suggested Citation

  • Roger E. A. Farmer, 1988. "Money and Contracts," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 55(3), pages 431-446.
  • Handle: RePEc:oup:restud:v:55:y:1988:i:3:p:431-446.
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.2307/2297393
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. repec:cdl:ucsdec:99-07r is not listed on IDEAS
    2. Sylvia Kaufmann, 2002. "Is there an asymmetric effect of monetary policy over time? A Bayesian analysis using Austrian data," Empirical Economics, Springer, vol. 27(2), pages 277-297.
    3. repec:cdl:ucsdec:99-07 is not listed on IDEAS
    4. den Haan, Wouter J. & Ramey, Garey & Watson, Joel, 2003. "Liquidity flows and fragility of business enterprises," Journal of Monetary Economics, Elsevier, vol. 50(6), pages 1215-1241, September.
    5. Haubrich, Joseph G & King, Robert G, 1991. "Sticky Prices, Money, and Business Fluctuations," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 23(2), pages 243-259, May.
    6. Asea, Patrick K. & Blomberg, Brock, 1998. "Lending cycles," Journal of Econometrics, Elsevier, vol. 83(1-2), pages 89-128.
    7. repec:wop:calsdi:99-07r is not listed on IDEAS
    8. Edward J. Green & Soo-Nam Oh, 1991. "Contracts, Constraints and Consumption," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(5), pages 883-899.
    9. Marvin J. Barth III & Valerie A. Ramey, 2002. "The Cost Channel of Monetary Transmission," NBER Chapters, in: NBER Macroeconomics Annual 2001, Volume 16, pages 199-256, National Bureau of Economic Research, Inc.
    10. Frédérique Bec & Jean-Olivier Hairault, 1993. "Taux d'intérêt, politique monétaire et activité économique en France : un examen empirique," Économie et Prévision, Programme National Persée, vol. 109(3), pages 13-24.
    11. repec:wop:calsdi:99-07 is not listed on IDEAS
    12. Qureshi, Irfan A. & Ahmad, Ghufran, 2021. "The cost-channel of monetary transmission under positive trend inflation," Economics Letters, Elsevier, vol. 201(C).
    13. Taoufik Rajhi & Michel Guillard, 1994. "Une note sur les liens entre croissance et taux d'intérêt," Revue Économique, Programme National Persée, vol. 45(3), pages 751-766.
    14. Berthold, Norbert & Gründler, Klaus, 2013. "The determinants of stagflation in a panel of countries," Discussion Paper Series 117 [rev.], Julius Maximilian University of Würzburg, Chair of Economic Order and Social Policy.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:oup:restud:v:55:y:1988:i:3:p:431-446.. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Oxford University Press (email available below). General contact details of provider: https://academic.oup.com/restud .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.