price rigidity

The answer depends upon the precise nature of price rigidity.

Contract problems affect both pricing rigidity and how the service can handle data.

Real price rigidity can result from several factors.

When imperfections are introduced while revealing the money stock to both the agents(the old and the young), price rigidity can occur.

Price rigidity is the proposition that some prices adjust slowly in response to market shortages or surpluses.

On a more empirical level, there is too little research on imperfect information as a source of price rigidity in models with perfectly flexible prices.

But in case of varying degrees of price rigidities amongst the nations, terms of trade is no longer insulated from monetary policies.

There are now many studies of price rigidity in different countries: the US, the Eurozone, the UK and others.

Even though price rigidities entail a loss of productive efficiency, this can be more than offset by a gain of efficiency in risk-sharing.

"Existence of an Exchange Equilibrium under Price rigidities", International Economic Review, 16, 2, 301-320, 1975.

However, following a study of prices in the US, Carlton (1986) has recently concluded that the degree of price rigidity in many industries is significant.

Some Keynesians placed less importance on price rigidities and continued to emphasize uncertainty, imperfect competition, and other possible sources of business cycles and unemployment.

"Capital Accumulation, Employment and Price Rigidity", 1941, RES.

Introduces an equilibrium concept for market economies operating under price rigidities (the so-called Drèze equilibrium) and a now widely used method of proving existence.

The idea of applying it as a general theory of Nominal Price Rigidity was simultaneously put forward by several New Keynesian economists in 1985-6.

Short-side power: on markets that do not clear due to price controls or price rigidities, those on the short side of the market have short-side power.

Imposing exogenously a particular form of price rigidity which happens to produce the result that Keynesian stabilization policies can work is hardly enough by itself to justify such policies.

European economists such as Edmond Malinvaud and Jacques Drèze expanded on the disequilibrium tradition and worked to explain price rigidity instead of simply assuming it.

Collusion and Price Rigidity, 71 Review of Economic Studies 317 (2004) (with Susan Athey & Kyle Bagwell)

In short, lower the degree of price rigidities in an economy belonging to a monetary union, greater would be the relative role of fiscal policies in economic stabilisation and vice versa.

After all, it seems likely that the form of wage and price rigidity in an economy will reflect the economic environment, one component of which is likely to be the behaviour of aggregate demand.

In Belgium, Jacques Drèze defined equilibria with price rigidities and quantity constraints and studied their properties, extending the Arrow-Debreu model of general equilibrium theory in mathematical economics.

Eighteen reprinted papers, organised under 8 headings: overview, equilibria with price rigidities, efficiency of constrained equilibria, public goods and the public sector, price adjustments, wage policies, econometrics, and policy.

Much of the research on this subject comes from "The Real Thing: Nominal Price Rigidity of the Nickel Coke," a 2004 paper by economists Daniel Levy and Andrew Young.

They built models with microfoundations of sticky prices that suggested recessions could still be explained by demand factors because price rigidities stop prices from falling to a market clearing level, leaving a surplus of goods and labor.