The Welfare Costs of Nominal Wage Contracting
We use a dynamic general equilibrium model to obtain quantitative estimates of the welfare costs of nominal wage contracts. We find that the welfare costs of such contracts can vary quite a bit depending on the degree of indexation, the size and persistence of money supply uncertainty and the contract length. However, the size and persistence of the technology shocks do not affect the welfare costs very much. The welfare costs of nominal wage contracting depend also on the elasticity of labor supply. If the elasticity of labor supply is small, the welfare costs can be substantial. We also study how contract length might respond to changes in the environment. The results show that contract length may not be very sensitive to the size and the persistence of real and nominal shocks.
To our knowledge, this item is not available for
download. To find whether it is available, there are three
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
|Date of creation:||Jun 1994|
|Date of revision:||22 Jan 1996|
|Publication status:||Forthcoming in Review of Economic Studies|
|Contact details of provider:|| Postal: |
Phone: (514) 987-6181
Fax: (514) 987-8494
Web page: http://ideas.uqam.ca/CREFE/
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:cre:crefwp:30. 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: (Stéphane Pallage)
If references are entirely missing, you can add them using this form.