TY  - JOUR
AU  - Fernandez,Raquel
TI  - Tariffs in an Economy with Incomplete Markets and Unemployment
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 2705
PY  - 1988
Y2  - September 1988
UR  - http://www.nber.org/papers/w2705
L1  - http://www.nber.org/papers/w2705.pdf
N1  - Author contact info:
Raquel Fernández
Department of Economics
New York University
19 West 4th Street, 6th Floor
New York, NY  10012
Tel: 212/998-8908
Fax: 212/995-4186
E-Mail: raquel.fernandez@nyu.edu
AB  - This paper examines the optimal labor contract in a small open economy with incomplete markets under international price uncertainty. The effect on employment, wages, and profits of different realizations of the state of nature is studied and agents' preferences concerning the implementation of a tariff are determined. The implicit contract equilibrium is shown to be constrained Pareto optimal; unanticipated tariff policy cannot be Pareto improving over free trade.
ER  -