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

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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 labour 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.

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Paper provided by Tor Vergata University, CEIS in its series CEIS Research Paper with number 211.

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Length: 27 pages
Date of creation: 26 Sep 2011
Date of revision: 26 Sep 2011
Handle: RePEc:rtv:ceisrp:211

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Postal: CEIS - Centre for Economic and International Studies - Faculty of Economics - University of Rome "Tor Vergata" - Via Columbia, 2 00133 Roma
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Web page: http://www.ceistorvergata.it
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Postal: CEIS - Centre for Economic and International Studies - Faculty of Economics - University of Rome "Tor Vergata" - Via Columbia, 2 00133 Roma
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Web: http://www.ceistorvergata.it

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

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