We Show That the Destabilizing Effects of Price Flexibility Due to the Increased Sensitivity of Contract Wages to Labor Market Tightness Depends Critically on an Arbitrary Restriction on the Information Available to Wage Settes Who Ae Negotiating Contact Renewals. If These Agents Are Put on the...

This Paper Shows That Evidence of a Unit Root in Gnp Can Be Consistent with a Contract-Based Approach to Business Cycles Unlike Previous Attempts on the Persistence of Output Fluctuations in Models with Nominal Rigidities, It Is Shown That a Shift From a Situation of Weak Or Moderate Nominal...

This Paper Show Monetary Policy Rules That Partially Accommodate Price Increases Can Worsen Both Price and Output Variability, Contrary to the Conventional Wisdom of Models with Staggered Contracts and Rational Expectations. This Phenomenon Is of Particular Interest Given Evidence From a Sample...

Des Elements Recents de Preuve Empirique Tires D'analyses de Vecteurs Autoregressifs Confirment L'importance des Changements Novateurs du Taux D'interet En Tant Que Determinant des Fluctuations Economiques. Nous Montrons Que Ce Resultat Peut Soutenir une Theorie du Cycle Economique Fondee Sur...

This Paper Questions the Capacity of the Two Leading Categories of Contract-Based Models of the Business Cycle to Give a Satisfactory Explanation for the Dynamic Behavior of Aggregates. Firstly, an Expected Market-Clearing Model That Is Designed to Account for the Dynamic Propagation of Shocks...

A commonly held view is that nominal rigidities are important for the transmission of monetary policy shocks. We argue that they are also important for understanding the dynamic effects of technology shocks, especially on labor hours, wages, and prices. Based on a dynamic general equilibrium...

We develop and estimate a dynamic stochastic general equilibrium model that features sticky prices, a variable elasticity of demand facing firms and firm-specific labor. While reconciling to a good extent the micro and macro evidence on the behavior of prices, the model offers an accurate...

We develop and estimate a DSGE model which realistically assumes that many goods in the economy are produced through more than one stage of production. Firms produce differentiated goods at an intermediate stage and a final stage, post different prices at both stages, and face stage-specific...