We formalize the link between optimal cost-sharing contracts and the production technology in the presence of moral hazard by appealing to several well-known results from duality theory. Building on intuitions from the interlinkage literature, we show that optimal contractual structure is...

of the resolution of uncertainty combined with endowments containing a slowly moving trend can result in extremely high welfare gains. The model is also able to account for a large set of international finance stylized facts. Our setup allows us to bridge part of the gap between the current...