%0 Report
        %A Kukharskyy, Bohdan
%A Pflüger, Michael P.
        %T Time Is on My Side: Relational Contracts and Aggregate Welfare
        %D 2018
        %8 2018 Mar
        %I Institute of Labor Economics (IZA)
        %C Bonn
        %7 IZA Discussion Paper
        %N 11387
        %U https://www.iza.org/index.php/publications/dp11387
        %X This paper develops a simple general equilibrium model which establishes a link between the patience of economic agents and the well-being of nations. We show that firms in long-term oriented countries can mitigate hold-up inefficiencies by engaging with their suppliers in relational contracting – informal agreements sustained by the value of future relationships. Our model predicts that countries with a higher level of patience will exhibit greater economic well-being and higher total factor productivity. We provide empirical evidence in line with the predictions of our theory.
        %K time preferences
%K relational contracting
%K aggregate welfare
%K TFP