Contracts and money

Boyan Jovanovic, Masako Ueda

    Research output: Contribution to journalArticlepeer-review

    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.

    Original languageEnglish (US)
    Pages (from-to)700-708
    Number of pages9
    JournalJournal of Political Economy
    Volume105
    Issue number4
    DOIs
    StatePublished - Aug 1997

    ASJC Scopus subject areas

    • Economics and Econometrics

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