Bhattarai, Saroj; Eggertsson, Gauti B.; Schoenle, Raphael - 2012
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 …