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We introduce wage setting via efficiency wages in the neoclassical one-sector growth model to study the growth effects of wage inertia. We compare the dynamic equilibrium of an economy with wage inertia with the equilibrium of an economy without it. We show that wage inertia affects the long run...
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Zagler investigates the interaction between changes in the level of unemployment and changes in the economic rate of … unemployment which the economy experiences and whether a decline in the level of unemployment will foster or deteriorate the growth …
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