TY  - JOUR
AU  - Aizenman,Joshua
TI  - Optimal Wage Re-Negotiation
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 1279
PY  - 1984
Y2  - November 1984
UR  - http://www.nber.org/papers/w1279
L1  - http://www.nber.org/papers/w1279.pdf
N1  - Author contact info:
Joshua Aizenman
Economics and SIR
USC
University Park
Los Angeles, CA 90089-0043
Tel: 213-740-4066
E-Mail: aizenman@usc.edu
AB  - This paper investigates an economy in which there are short-term wage contracts that are re-negotiated under certain conditions. This paper determines the optimal frequency of wage re-negotiation and shows that it depends positively on measures of aggregate variability and Phillips curve slope. The role of optimal wage re-negotiation is to mitigate the output effects of various shocks. In the context of an open economy, it is shown that the desirable exchange rate regime in an economy with optimal wage re-negotiation depends on the stochastic structure of the economy.
ER  -