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Efficient Bargains and Currency Devaluation

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  • CHING‐CHONG LAI
  • JUIN‐JEN CHANG
  • WEN‐YA CHANG

Abstract

This paper proposes a new route, namely efficient bargains between the union and the firm over wage and employment, to shed light on the contractionary effects of a currency devaluation. It is found that a currency devaluation will definitely depress the supply of domestic goods when the union and the firm negotiate an efficient wage‐employment contract. Thus our result can be regarded as a theoretical vehicle for explaining the empirical findings of the contractionary devaluation.

Suggested Citation

  • Ching‐Chong Lai & Juin‐Jen Chang & Wen‐Ya Chang, 1996. "Efficient Bargains and Currency Devaluation," The Economic Record, The Economic Society of Australia, vol. 72(219), pages 313-318, December.
    • Handle: RePEc:bla:ecorec:v:72:y:1996:i:219:p:313-318
    DOI: 10.1111/j.1475-4932.1996.tb00965.x
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    References listed on IDEAS

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    Cited by:

    1. Hong-Yu Lin, 2014. "Transaction Costs, Multiple Equilibria, and Currency Devaluation," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 4(12), pages 1705-1718, December.

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