Working Paper: NBER ID: w7731
Authors: Robert Rich; Joseph Tracy
Abstract: This paper provides an empirical investigation into the relationship between ex ante U.S. labor contract durations and uncertainty over the period 1970 to 1995. We construct measures of inflation uncertainty as well as aggregate nominal and real uncertainty. The results not only corroborate previous findings of an inverse relationship between contract duration and inflation uncertainty, but document that this relationship extends to both measures of aggregate uncertainty. We also explore the robustness of this relationship to the various measures of inflation uncertainty that have appeared in the literature.
Keywords: No keywords provided
JEL Codes: J41; J51; E24
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Inflation Uncertainty (E31) | Shorter Contract Durations (C41) |
| Nominal Uncertainty (D89) | Shorter Contract Durations (C41) |
| Real Uncertainty (D89) | Shorter Contract Durations (C41) |
| Increased Uncertainty (D89) | Shorter Contracts as Risk Management Strategy (D86) |
| Labor Contract Durations (J41) | Economic Environment at Signing (G19) |