Economic throught the prism of new Keynesian economics

Nikoloski, Krume and Aleksoski, Ognen and Petrusheva, Borka (2014) Economic throught the prism of new Keynesian economics. In: International Scientific Conference "Eco-Trend", 28-29 Nov 2014, Targu Jiu, Romania.

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Abstract

In this paper we will study the relation between real wage rigidity and nominal price and wage rigidities. We formulate a generalized price-setting framework that incorporates staggered contracts of multiple durations and that enables us to directly identify the influences of nominal vs. real rigidities. We also find that new contracts exhibit very low sensitivity to marginal cost, corresponding to a relatively high degree of real rigidity. For instance, in models focused on labor contracts, wages are regarded as an „insurance” provided by the employer to the workers, while in efficiency wage models, wages are determinants of labor productivity. Such models have the ability to account for unemployment, but they are not able to explain the failure of the classical dichotomy.

Item Type: Conference or Workshop Item (Paper)
Subjects: Social Sciences > Economics and business
Divisions: Faculty of Economics
Depositing User: Natasa Stojovska
Date Deposited: 05 Dec 2014 10:11
Last Modified: 05 Dec 2014 10:11
URI: http://eprints.ugd.edu.mk/id/eprint/11583

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