We study the implications of increased price flexibility on aggregate output volatility in a dynamic stochastic general … effect of demand shocks on output if interest rates do not respond strongly to infl ation, while higher flexibility amplifies … finding is that increased price flexibility would have been destabilizing for output and employment. -- increased price …

We study whether segmented labor markets with flexibility at the margin (e.g., just affecting fixed-term employees) can … achieve similar volatility than fully deregulated labor markets. Flexibility at the margin produces a gap in separation costs … explain the similar volatility observed in many regulated OECD labor markets with flexibility at the margin vis-à-vis the …