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| Author: | Maussner, A. |
| Title: | Wage flexibility, menu cost, and price level stickiness |
| Journal: | Journal of Institutional and Theoretical Economics
1994 : DEC, VOL. 150:4, p. 670-692 |
| Index terms: | PRICE LEVEL PAY FLEXIBILITY |
| Language: | eng |
| Abstract: | The author considers the relation between wage determination and price level stickiness along the lines of the menu costs approach. The author allows for flexible wages and a variable fraction of firms adjusting their prices in response to aggregate demand shocks. Strategic substitutability between firms arises for empirically plausible parameter values implying a price elasticity of aggregate supply which is neither zero nor infinite. |
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