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Productivity Growth and Volatility: How Important Are Wage and Price Rigidities?

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  • Barbara Annicchiarico

    ()
    (Facoltà di Economia, Università degli Studi di Roma “Tor Vergata”, Italy)

  • Alessandra Pelloni

    ()
    (Facoltà di Economia, Università degli Studi di Roma “Tor Vergata”, Italy)

Abstract

We study the implications of having different sources of nominal rigidities on the relationship between productivity growth and shocks volatility in a model with pro-cyclical R&D and imperfect competition in goods and labour markets. We show that the effects of uncertainty on long-term growth not only depend on the source of fluctuations, as recent literature shows, but also, and crucially, on whether prices and/or wages are rigid.

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Paper provided by The Rimini Centre for Economic Analysis in its series Working Paper Series with number 02_13.

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Date of creation: Jan 2013
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Handle: RePEc:rim:rimwps:02_13

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Keywords: Productivity growth; volatility; nominal rigidities; uncertainty;

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