Is Increased Nominal Flexibility Stabilizing? Some International Evidence

Economica, 1991, vol. 58, issue 232, pages 441-59

Abstract: This paper studies the impact of the increased rigidity on macroeconomic fluctuations. The author uses this evidence to test the validity of two major "Keynesian" explanations. The first is the conventional sticky wage/sticky price explanation that suggests that the increased nominal rigidity, ceteris paribus, is destabilizing. The second is a recently developed explanation that suggests that the increased flexibility is destabilizing. The author's results are consistent with the conventional implications. Copyright 1991 by The London School of Economics and Political Science.

Date: 1991

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