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.
|Original language||English (US)|
|Number of pages||9|
|Journal||Journal of Political Economy|
|State||Published - Aug 1997|
ASJC Scopus subject areas
- Economics and Econometrics