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

  • Barbara Annicchiarico
  • Alessandra Pelloni

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. Copyright 2014 Oxford University Press 2013 All rights reserved, Oxford University Press.

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Article provided by Oxford University Press in its journal Oxford Economic Papers.

Volume (Year): 66 (2014)
Issue (Month): 1 (January)
Pages: 306-324

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Handle: RePEc:oup:oxecpp:v:66:y:2014:i:1:p:306-324
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