Efficient Bargains and Currency Devaluation

Ching-chong Lai, Juin‐jen Chang and Wen‐ya Chang
Authors registered in the RePEc Author Service: Juin-jen Chang

The Economic Record, 1996, vol. 72, issue 219, 313-318

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.

Date: 1996
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