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This paper shows that price rigidity evolves in an economy populated by imperfectly rational agents who experiment with alternative rules of thumb. In the model, firms must set their prices in face of aggregate demand shocks. Their payoff depends on the level of aggregate demand, as well as on...
Persistent link: https://www.econbiz.de/10005051547
place? We develop a political economy theory of the endogenous emergence of fiscal crises, based on the idea that the …
Persistent link: https://www.econbiz.de/10012946844