Contracts and Money

JOURNAL OF POLITICAL ECONOMY, Vol. 105, No. 4 (August 1997)

Posted: 1 Sep 1997

See all articles by Boyan Jovanovic

Boyan Jovanovic

New York University - Department of Economics

Masako Ueda

University of Wisconsin, Madison - School of Business; Centre for Economic Policy Research (CEPR)

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Abstract

Why are contracts not fully indexed? In a setting in which fully indexed contracts are feasible, we 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.

JEL Classification: D82, D39, E24

Suggested Citation

Jovanovic, Boyan and Ueda, Masako, Contracts and Money. JOURNAL OF POLITICAL ECONOMY, Vol. 105, No. 4 (August 1997), Available at SSRN: https://ssrn.com/abstract=10751

Boyan Jovanovic (Contact Author)

New York University - Department of Economics ( email )

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New York, NY 10012
United States

Masako Ueda

University of Wisconsin, Madison - School of Business ( email )

975 University Avenue
Madison, WI 53706
United States
608-262-3656 (Phone)
608-265-4195 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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