Are prices and wages sticky downwards?

Quarterly Bulletin 1998 Q3
Published on 01 September 1998

By Anthony Yates of the Bank’s Structural Economic Analysis Division.

The evidence has most commonly been cited in the context of wages—if downward nominal rigidities exist and prevent wages from adjusting fully to a shock to demand or supply, then such a shock may affect levels of employment. He concludes that the theoretical and empirical cases are both at best unproven.

PDFAre prices and wages sticky downwards?

Other Quarterly Bulletin 1998 Q3 articles

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