Productivity Growth and Volatility: How Important are Wage and Price Rigidities?
27 Pages Posted: 26 Sep 2011
Date Written: September, 26 2011
We study the implications of having different sources of nominal rigidities on the relationship between productivity growth and shocks volatility in a model with procyclical R&D and imperfect competition in goods and labor markets. We show that the effects of uncertainty on long-term growth not only depends on the source of fluctuations, as recent literature shows, but also, and crucially, on whether prices and/or wages are rigid.
Keywords: productivity growth, volatility, nominal rigidities, uncertainty
JEL Classification: E32, E52, O42
Suggested Citation: Suggested Citation