Futures contracts imply that the central bank will raise short-term rates at each of its next three meetings to 3%, but will then stop, so there will be virtually no more Fed tightening in the second half of 2005 or in 2006.If that is puzzling, the behaviour of long-term interest rates is even odder.
That volatile market, courts said, was inherently risky and the contracts implied as much.
For instance, fixed-term contract workers might be less productive, less educated, and younger than workers under indefinite-term contracts, implying different wage and employment effects in response to immigration.
Traders selling the contracts imply they are more than happy to have shares of the underlying stock put to them at an effective price of $0.83 each should the puts land in-the-money at expiration.
In this setting, the outcome of the bargaining game is outside the labour demand curve; in the particular case of isoelastic demand, efficient bargaining contracts imply rigid real wages (McDonald and Solow 1981).
They find that temporary workers have lower sick-rates (generating a negative correlation between the absenteeism rate and the fraction of temporary contracts), implying that an employee incentive effect is at work, rather than a selection effect, since the latter would have instead generated a positive correlation between absenteeism and temporary contracts.
Plain-vanilla put buying in the March contract implies some investors are bracing for potential continued declines in the value of the underlying shares through expiration.
The theory of co-insurance contract implies that the family initially invests in the education and livelihood of its members and may finance the costs of its future emigration.
True freedom of contract implies, at a minimum, equality of bargaining power, information, and meaningful alternatives.
