Contracts and Money
JOURNAL OF POLITICAL ECONOMY, Vol. 105, No. 4 (August 1997)
Posted: 1 Sep 1997
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.
JEL Classification: D82, D39, E24
Suggested Citation: Suggested Citation