Rotemberg, Julio J.; Woodford, Michael - 2021
If changes in aggregate demand were an important source of macroeconomic fluctuations, real wages would be … variation at cyclical frequencies. The first assumes only that the elasticity of demand is a function of the level of output. In … theory, markups are chosen to ensure that no one deviates from an (implicitly) collusive understanding. Increases in rates of …
