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productivity and demand shocks have distinct implications for the firms' output and price adjustments. Using panel data on prices … productivity and demand for the labor market and the dispersions of prices and labor productivity. We further analyze the impact of … shocks to the first and second moments of idiosyncratic risk on macroeconomic outcomes. An increase in demand uncertainty …
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This paper studies Tobin's proposition that inflation quot;greasesquot; the wheels of the labor market. The analysis is carried out using a simple dynamic stochastic general equilibrium model with asymmetric wage adjustment costs. Optimal inflation is determined by a benevolent government that...
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