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Contracts and Money

  • Jovanic, Boyan
  • Ueda, Masako

Why are contracts not fully indexed? In a setting in which fully indexed contracts are feasible, the authors find that, when price-level data are gathered with delay, these contracts are not renegotiation-proof. The contracts that replace them entail a lower level of welfare for the parties to that contract. They also imply that real variables respond to nominal shocks. Copyright 1997 by the University of Chicago.

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Article provided by University of Chicago Press in its journal Journal of Political Economy.

Volume (Year): 105 (1997)
Issue (Month): 4 (August)
Pages: 700-708

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Handle: RePEc:ucp:jpolec:v:105:y:1997:i:4:p:700-708
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