Bubbles, wage rigidity, and persistent slumps

Andrew Hanson and Toan Phan

Economics Letters, 2017, vol. 151, issue C, 66-70

Abstract: We embed downward wage rigidity into a rational bubble model. We analytically characterize how the collapse of bubbles can interact with wage rigidity to generate deep and protracted recessions with involuntary unemployment, such as those in Japan or Spain.

Keywords: Rational bubbles; Wage rigidity; Unemployment; Long recession (search for similar items in EconPapers)
JEL-codes: E2 E3 E4 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (20)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:151:y:2017:i:c:p:66-70

DOI: 10.1016/j.econlet.2016.12.018

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