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Aizenman, Joshua - 2021

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...

Persistent link: https://www.econbiz.de/10013219727

Optimal Wage Re-Negotiation

Aizenman, Joshua - 2021

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....

Persistent link: https://www.econbiz.de/10013221119

Sectorial Wages and the Real Exchange Rate

Aizenman, Joshua; Frenkel, Jacob A. - 2021

prices. How should the structure of sectorial wages adjust in response to such a shock? This question is addressed in the … are affected by the exogenous real shock. Cost of negotiations result in labor market contracts which set nominal wages in …-indexation rules. The optimal rules alter both the absolute and the relative structure of sectorial nominal wages. We examine the …

Persistent link: https://www.econbiz.de/10013225012

Wage Contracts with Incomplete and Costly Information

Aizenman, Joshua - 2021

Optimal wage indexation, as derived by Gray, was subject to criticism due to a lack of efficient use of information; failure to clear the market which resulted in non-optimal contracts; and the lack of an explicit use of welfare criteria. The purpose of this paper is to derive a wage contract...

Persistent link: https://www.econbiz.de/10013246094

Institutional Efficiency, Monitoring Costs, and the Investment Share of FDI

Aizenman, Joshua; Spiegel, Mark M. - 2021

advantage. Under these asymmetries, multinationals pay higher wages than domestic producers, in line with the insight of … efficiency wages and with the evidence about the multinationals wage premium.' FDI is also more sensitive to increases in …

Persistent link: https://www.econbiz.de/10013310209

Trade Dependency, Bargaining and External Debt

Aizenman, Joshua - 2010

This paper analyzes the factors determining the effective payment on outstanding debt in the presence of partial defaults, and the feasibility of renewed investment. We show that the bargaining outcome, which determines the repayment, is dictated by the trade dependency, as measured by the...

Persistent link: https://www.econbiz.de/10013135125

Asset Class Diversification and Delegation of Responsibilities between Central Banks and Sovereign Wealth Funds

Aizenman, Joshua - 2010

This paper presents a model comparing the degree of asset class diversification abroad by a central bank and a sovereign wealth fund. We show that if the central bank manages its foreign asset holdings in order to meet balance of payments needs, particularly in reducing the probability of sudden...

Persistent link: https://www.econbiz.de/10013137768

Debt and Conditionality Under Endogenous Terms of Trade Adjustment

Aizenman, Joshua - 2010

The purpose of this study is to identify conditions under which renewed international. lending will benefit both the developed and the developing countries. Our analysis will evaluate how the presence of terms of trade adjust-rent and distorted credit markets affect the conditions for the...

Persistent link: https://www.econbiz.de/10013139886

Financial Crisis and the Paradox of Under- and Over-Regulation

Aizenman, Joshua - 2010

This paper illustrates the paradox of prudential under-regulation in an economy that adopts financial reform, a reform which exposes the economy to future financial crises. There is individual-uncertainty about the crisis incidence, and the probability of the crisis is updated sequentially...

Persistent link: https://www.econbiz.de/10013152612

The Real Exchange Rate, Mercantilism and the Learning by Doing Externality

Aizenman, Joshua - 2008

This paper examines the degree to which the learning by doing externality [LBD] calls for an undervalued exchange rate, a policy suggested by recent empirical studies which concluded that mildly undervalued real exchange rate may enhance growth. We obtain mixed results. For an economy where LBD...

Persistent link: https://www.econbiz.de/10012772382