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RDP 9006: Wage Contracts, Sticky Prices and Exchange Rate Volatility: Evidence from Nine Industrial Countries
Equation (9c)
Min
θ
E
t
−
1
{
δ
[
(
(
w
1
t
−
t
−
1
p
t
)
−
t
−
1
(
w
1
t
−
t
−
1
p
t
)
)
−
(
(
w
1
t
−
t
−
1
p
t
)
O
−
t
−
1
(
w
1
t
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t
−
1
p
t
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O
)
]
2
+
δ
2
[
(
(
w
1
t
+
1
−
t
p
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+
1
)
−
t
−
1
(
w
1
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+
1
−
t
p
t
+
1
)
)
−
(
(
w
1
t
+
1
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t
p
t
+
1
)
O
−
t
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1
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w
1
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+
1
−
t
p
t
+
1
)
O
)
]
2
}
.
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