Optimality of Wage Stability
Show that the devaluation rule given in equation (13.79) is optimal, that it implies a constant nominal wage rate at all times, and that it induces nontrending paths for the nominal exchagne rate, the nominal price of nontradables, and the consumer price level.
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---
title: "Exercise 13.14"
subtitle: "Optimality of Wage Stability"
---
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## Problem
Show that the devaluation rule given in equation (13.79) is optimal, that it implies a constant nominal wage rate at all times, and that it induces nontrending paths for the nominal exchagne rate, the nominal price of nontradables, and the consumer price level.
## Answer
_No solution has been posted yet. If you have a solution, we invite you to share it in the comment box at the bottom of this page._