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Productivity growth and volatility: How important are wage and price rigidities?

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  • Annicchiarico Barbara
  • Pelloni Alessandra

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 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 Department of Communication, University of Teramo in its series wp.comunite with number 0089.

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Date of creation: Dec 2011
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Handle: RePEc:ter:wpaper:0089

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Keywords: productivity; growth; volatility;

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