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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- Faria, Joao Ricardo, 2000. "Supervision and effort in an intertemporal efficiency wage model: the role of the Solow condition," Economics Letters, Elsevier, vol. 67(1), pages 93-98, April.
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- Bernanke, Ben S & Parkinson, Martin L, 1991. "Procyclical Labor Productivity and Competing Theories of the Business Cycle: Some Evidence from Interwar U.S. Manufacturing Industries," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 439-459, June.
- Gray, Jo Anna, 1976. "Wage indexation: A macroeconomic approach," Journal of Monetary Economics, Elsevier, vol. 2(2), pages 221-235, April.
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