The incentive to call for contract renewal to adjust prices is considered from a bilateral perspective in a setting where changes in outside opportunities drive the incentive to renew contracts and costs preclude continuous renewal. A model encompassing several contract forms is formulated, and...

The future purchasing power of wage income may become risky in the presence of capital market imperfections. Current nominal wages, therefore, have intertemporal implications which in turn affect wage determination. The influence of consumption risk on wage setting is analyzed in a general...

Policy mix problems may arise in a monetary union with centralized monetary policy and decentralized fiscal policy. A consequence of this may be an inappropriate stabilization of shocks. This paper addresses how policy coordination problems are affected by the objectives of the monetary...

Persistent real effects of nominal shocks is considered in an intertemporal macromodel with capital accumulation and staggered nominal wage contracting. By placing the contracting process in a setting of imperfect competition it becomes possible to avoid the standard problem that intertemporal...