Monetary shocks with variable effort
In a model with rigid nominal wages, full information and competitive product markets, I show that when an effort augmented production function is incorporated into an analysis of supply and demand shocks, the outcomes are in line with traditional Keynesian analysis for a wide range of parameter values. Monetary shocks can increase output and employment.
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References listed on IDEAS
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- Laurence Ball & David Romer, 1990.
"Real Rigidities and the Non-Neutrality of Money,"
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NBER Working Papers
3503, National Bureau of Economic Research, Inc.
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- Solow, Robert M., 1979. "Another possible source of wage stickiness," Journal of Macroeconomics, Elsevier, vol. 1(1), pages 79-82.
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