Erschienen:
Cambridge, Mass: National Bureau of Economic Research, April 1983
Erschienen in:NBER working paper series ; no. w1108
Umfang:
1 Online-Ressource
Sprache:
Englisch
DOI:
10.3386/w1108
Identifikator:
Reproduktionsnotiz:
Hardcopy version available to institutional subscribers
Entstehung:
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Beschreibung:
This paper analyzes the degree of short-run, real wage flexibility in a two-sector economy under floating rates. This is done by deriving optimal wage indexation in a contracting framework. We find that the more closed the economy, the lower the degree of wage indexation. As a result, output will fluctuate less around its desired level in a more closed economy. These findings further imply that a given unexpected monetary shock will cause as maller output shock in a more open economy, whereas a given real shock will induce a smaller output shock in a more closed economy