TY - JOUR
T1 - Labor contracts and the role of monetary policy in an overlapping generations model
AU - Cooper, Russell
N1 - Funding Information:
* I am grateful to Costas Azariadis for helpful discussion on this topic over the last few years. In addition, Oliver Hart provided useful comments and questions at the start of this research, and Bill Lang’s careful reading of this manuscript is much appreciated. Finally, 1 am grateful to anonymous referees, to seminar participants at Yale, the University of Pennsylvania, the University of Western Ontario, the University of Wisconsin, the University of Toronto, the 1983 Summer Econometric Society Meetings, and last, but not least, my colleagues at the 1983 NBER Summer Institute for their helpful comments. Financial support from the National Science Foundation (SES 82-08899) is gratefully acknowledged. The Cowles Foundation at Yale University provided financial and intellectual support during the preparation of this manuscript. All remaining errors are my own.
PY - 1988/4
Y1 - 1988/4
N2 - This paper characterizes labor contracts in a dynamic economy subject to both real and nominal shocks. In this environment, we compare alternative means of trading labor services: spot markets, fixed nominal wage contracts, and price-contingent contracts. The welfare ordering of these market structures is shown to depend on the relative variability of the real and nominal shocks and the costs of contingent contracts. The paper also investigates the role of monetary policy and the neutrality of feedback rules. Finally, we demonstrate that the optimal policy is nonstochastic.
AB - This paper characterizes labor contracts in a dynamic economy subject to both real and nominal shocks. In this environment, we compare alternative means of trading labor services: spot markets, fixed nominal wage contracts, and price-contingent contracts. The welfare ordering of these market structures is shown to depend on the relative variability of the real and nominal shocks and the costs of contingent contracts. The paper also investigates the role of monetary policy and the neutrality of feedback rules. Finally, we demonstrate that the optimal policy is nonstochastic.
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U2 - 10.1016/0022-0531(88)90002-6
DO - 10.1016/0022-0531(88)90002-6
M3 - Article
AN - SCOPUS:38249027419
SN - 0022-0531
VL - 44
SP - 231
EP - 250
JO - Journal of Economic Theory
JF - Journal of Economic Theory
IS - 2
ER -