Year: 1987
Type: report
Abstract: Rigidities in real prices are not sufficient to create rigidities in nominal prices and real effects of nominal shocks.And, by themselves, snail frictions in nominal adjustment, such as costs of changing, prices, create only small non-neutralities.But this paper shows that substantial nominal rigidity can arise from a combination of real rigidities and small nominal frictions.The paper shows the connection between real and nominal rigidity given the presence of nominal frictions both in general and for several specific sources of real rigidity: costs of adjusting real prices, asymmetric demand arising front imperfect information, and efficiency wages.
DOI: 10.3386/w2476
Authors: Laurence Ball, David Romer
Language: English
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W2896561002