Fernandez, Raquel. <br/><br/>
Tariffs in an Economy with Incomplete Markets and Unemployment / 
Raquel Fernandez. 
 - Cambridge, Mass.  National Bureau of Economic Research  1988. 
 - 1 online resource:  illustrations (black and white); 
 - NBER working paper series  no. w2705 .
 - Working Paper Series (National Bureau of Economic Research)  no. w2705. .
<br/><br/> September 1988. 
<br/><br/> This paper examines the optimal labor contract in a small open economy with incomplete markets under international price uncertainty. The effect on employment, wages, and profits of different realizations of the state of nature is studied and agents' preferences concerning the implementation of a tariff are determined. The implicit contract equilibrium is shown to be constrained Pareto optimal; unanticipated tariff policy cannot be Pareto improving over free trade. 
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