TY  - RPRT
        AU  - Kukharskyy, Bohdan
AU  - Pflüger, Michael P.
        TI  - Time Is on My Side: Relational Contracts and Aggregate Welfare
        PY  - 2018/Mar/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 11387
        UR  - https://www.iza.org/index.php/publications/dp11387
        AB  - 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.
        KW  - time preferences
KW  - relational contracting
KW  - aggregate welfare
KW  - TFP
        ER  -