English (United Kingdom)

https://curated-unify.zendy.io/wp-json/zendy-region/v1/featured_content/oa?rat=en

https://curated-unify.zendy.io/wp-json/zendy-region/v1/highlighted_journal/

Zendy Plus

Presents the access of premium content as premium feature

Premium Content

Presents the keyphrase highlighting as premium feature

Keyphrase Highlighting

Presents the summarisation as premium feature

Summarisation

Insights

Presents the pdf analysis as premium feature

PDF Analysis

Presents the zaia usage as premium feature

ZAIA

Zendy Tools

Zendy Open

This paper begins with the hypothesis that large economic fluctuations, the marked changes in the unemployment that characterize market economies, are a consequence of problems of adjustment to disturbances, especially adjustments of wages and prices. Two strands of work have addressed these problems of adjustment. One focuses on rigidities: downward rigidities in wages are at the center of traditional Keynesian models. The other focuses on the consequences of rapid changes, particularly in asset prices, in the context of markets with incomplete contracting (imperfect indexing) and imperfect capital markets. While the second tradition traces its origins at least back to Irving Fisher’s debt-deflation theories, it has been revived in the newKeynesian work of Bruce Greenwald and Stiglitz (1988, 1989, 1990b, 1993, 1995) and others. The fact that wages and prices did fall dramatically in the Great Depression (by more than a third in the United States) provided some of the impetus to the latter theory. The major economic downturn this year in East Asia, with unemployment in Indonesia soaring from 4.7 percent to 14.3 percent and output falling by at least 16 percent, was accompanied by huge changes in prices: over the first year of the crisis, the current best estimate is that Indonesian real wages fell by 40–60 percent (World Bank, 1998 p. 105). This result, I would argue, is better interpreted through the second strand of thought.

Toward a General Theory of Wage and Price Rigidities and Economic Fluctuations