The conventional menu cost framework performs poorly with realistic labour supply elasticities: the menu costs required for price rigidity are very high and the welfare consequences of monetary disturbances are negligible. We show that the presence of dual labour markets greatly improves the...

How do heterogeneous types of product market competition affect the macroeconomic properties of the economy? The author considers an economy with three different types of product market: oligopolistic, competitive, and fix-price. He examines the effect of an increase in the money supply and how...

This survey outlines the general lessons of recent literature on imperfectly competitive macroeconomics for the theory of monetary and fiscal policy. A general framework is presented which nests most of the existing literature. Although money is of itself neutral, the presence of menu costs,...

This paper provides a simple example of a multisector unionized economy with equilibrium unemployment and for which monetary policy has a standard Keynesian multiplier. In equilibrium, unions choose a wage that is a fixed markup over the nominal unemployment benefit level, which can lead to...

This pape r combines two ideas in oligopoly theory: models of strategic investment and T. Bresnehan's_(1981) concept of consistency of conjectures. Firms precommit capita l stocks and hencedetermine their short-run cost function. The degree of compet ition in the product market is made...