Talk:Nominal rigidity

"Jobless recovery"

I guess this is an American economic recovery? If so state that its American! This will lessen confusion. --Albert 19:41, 2 May 2006 (UTC)

Good point. Fixed. --David Youngberg 19:04, 3 May 2006 (UTC)

Lucas Imperfect info model

Aka "Islands" or "surprise model" is described in its own page -- Lucas-Islands_model . As another important explanation for price stickiness it's probably worth linking to from here. 128.164.16.120 (talk) 01:28, 10 August 2009 (UTC)

Taylor and Calvo

This section is still not very useful for the non-specialist. We need some further amplification on the taylor and Calvo models. They should really have their own pages. But in the meantime, why not add something here?Byronmercury (talk) 14:30, 3 June 2012 (UTC)

We could also do with a section on Sticky information. Again, I will do it eventually if no one wants to get started in the meantime (Basically: Stan Fischer's 1977 model, Mankiw and Reis 2002etc..Byronmercury (talk) 13:30, 22 June 2012 (UTC)

had a first go at this: plenty of room for improvement!Byronmercury (talk) 07:22, 8 January 2013 (UTC)

Thanks for adding the sticky information section. It was definitely needed. The "Evaluation of sticky information models" section seems like it might have original research problems (see WP:OR). It doesn't look like anybody has published the criticism that sticky information models lack nominal price rigidity. Am I missing something? Does one of the sources evaluate sticky information models based on their lack of nominal rigidities?--Bkwillwm (talk) 01:42, 9 January 2013 (UTC)

Thanks for the encouragement. In the evaluation, I was just repeating what I had heard people say. However, you are quite right, the wikipedia guidelines require references. I will take a look at some articles to find a suitable reference and remove the evaluation section if I cannot find one. Byronmercury (talk) 07:07, 9 January 2013 (UTC)

Added references. The Knotec is especially relevant and a really cute title. Thanks for your comment: it got me to read some new papers. Most of the references I first looked at were aimed at criticizing the indexation assumption for being at odds with the micro-data (e.g. Cogley and Sbordonne AER 2008)rather than sticky information models, although of course the argument is exactly the same.Byronmercury (talk) 11:51, 6 February 2013 (UTC)

agree there should be more on Taylor and Calvo: indeed, they should have their own pages. Added a paragraph on each. Sorry, cannot do equations: it would be good to have some of the basic equations.Zosimos102 (talk) 11:33, 28 March 2013 (UTC)

there is now a new Taylor contracts page. It has the maths: am working on Calvo page.Byronmercury (talk) 14:30, 21 November 2014 (UTC)

A Calvo staggered contracts page as well (a start at least!).Byronmercury (talk) 16:03, 5 December 2014 (UTC)

Move from "Sticky (economics)" to "Nominal rigidity"

Bender235moved this page from "sticky (economics)" to "nominal rigidity." I'm not completely opposed to this change, but I think it requires some additional work. At the very least, we have to do something with the "sticky information" section since it doesn't belong in a "nominal rigidity" article. I know that "sticky prices" and "nominal rigidities" can be used interchangably, but occasionally there is an important distinction. "Nominal rigidity" is often only used when talking about high-level, aggregated models (AS-AD) while "sticky prices" is more often used when the specific mechanism or model for rigidity is being discussed (menu cost, Calvo pricing). Any ideas how this should be organized. Should we go back to a very general "Sticky (economics)" article? Or maybe have a "Nominal rigidity" that discusses sticky prices and another sticky information article? I'm not sure what the best solution is, but I don't think we can leave the current name/organization as is.--Bkwillwm (talk) 04:30, 4 January 2014 (UTC)

Am happy for a separate sticky info page, and would assist in generating some additional material. However, I have heard people say that sticky info is a form of nominal rigidity, in that prices do not respond fully to current market conditions. It is this a form of "partial" nominal rigidity: prices are no fixed, but will not in general vary as much as fully flexible prices would.Byronmercury (talk) 12:25, 15 January 2014 (UTC)

Had a bit of a look into this page (history etc). The "stickiness" version was a redirection of an older "nominal rigidity" page, from which I suspect the rather erudite list of "further reading" comes from (the current article shows no sign of being related to the items listed). The article also indicates that "sticky" is used in the social sciences other than economics. I have been able to find absolutely no evidence of this. Take a look at the disambiguation page https://en.wikipedia.org/wiki/Sticky. From the general point of view of economics, "stickiness" has only been used in the context of price and wage stickiness (what we call nominal rigidity) and sticky information. There is one exception I have found, which is Mankiw and Reis JEEA 2007, which looks at the implications for Sticky infomation in general equilibrium applied to a range of decision variables (consumption, labor supply etc.) as well as prices. I do not think that Mankiw and Reis 2007 has come into general usage yet. I therefore suggest that we simply treat "sticky prices" as a general alternative term for nominal rigidity and note the exceptions mentioned by Bkwillwm. Byronmercury (talk) 15:51, 19 January 2014 (UTC)

Redrafted opening paragraph. I intend to replace the section "examples" which is currently out of place with a short section on "empirical evidence" giving a brief taste of the evidence for nominal rigidity (which again is worth a whole page to itself). Byronmercury (talk) 16:45, 19 January 2014 (UTC)

Dr. van Rens's comment on this article

Dr. van Rens has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:

"Wages, prices, and employment levels can all be sticky" is confusing. Employment is a quantity. The terms rigidity and stickiness, as discussed in this article, (should) refer to wages and prices only.

"when stickiness enters the system, oscillations in one direction are favored over the other". This is true only for asymmetric rigidity, e.g. downward nominal wage rigidity. Rigidity may be symmetric as well, in the sense that it limits movements of the price in upward and downward directions in the same manner. In fact, price rigidity in most macroeconomic models, e.g. the standard new Keynesian model, is symmetric (Calvo price stickiness).

"In time-dependent models, firms decide to change prices and then evaluate market conditions; In state-dependent models, firms evaluate market conditions and then decide how to respond." This is not wrong, but refers to a narrow category of sticky price models, in which rigidity takes the form that prices are fixed until something happens. There are alternatively models of rigidity, in which prices move continuously, but not as much as under flexible prices.

For sticky information, a very important reference, which is not discussed in the article, is: Bartosz Mackowiak & Mirko Wiederholt, 2009. "Optimal Sticky Prices under Rational Inattention," American Economic Review, American Economic Association, vol. 99(3), pages 769-803, June.

The article is almost entirely about sticky prices. There are several large strands of literature on sticky wages, which could roughly be separated into downward nominal wage rigidity, (symmetric) wage rigidity, and real wage rigidity. A (non-comprehensive) list of important references (both theoretical and empirical) on real wage rigidity includes: Barro, Robert J. (1977). Long-Term Contracting, Sticky Prices, and Monetary Policy. Journal of Monetary Economics, 3(3) Beaudry, Paul and John DiNardo (1991). The Effect of Implicit Contracts on the Movement of Wages over the Business Cycle: Evidence from Micro Data, Journal of Political Economy, 99(4), pp.665-688 Bils, Mark J. (1985). Real Wages Over the Business Cycle: Evidence From Panel Data, Journal of Political Economy, 93(4), pp.666–689 Carneiro, Anabela, Paulo Guimarães and Pedro Portugal (2012). Real Wages and the Business Cycle: Accounting for Worker and Firm Heterogeneity, American Economic Journal: Macroeconomics, 4(2), pp.133-152 Hall, Robert E. (2005). Employment Fluctuations with Equilibrium Wage Stickiness, American Economic Review, 95(1), pp.50-65 Pissarides, Christopher A. (2009). The Unemployment Volatility Puzzle: Is Wage Stickiness the Answer? The Walras-Bowley lecture, North American Summer Meetings of the Econometric Society, Econometrica, 77, pp.1339-1369

Haefke, C., M. Sonntag, and T. van Rens (2013). Wage rigidity and job creation. Journal of Monetary Economics 60 (8), 887ñ899

We hope Wikipedians on this talk page can take advantage of these comments and improve the quality of the article accordingly.

Dr. van Rens has published scholarly research which seems to be relevant to this Wikipedia article:

• Reference : Benedikt Herz and Thijs van Rens, 2011. "Structural Unemployment," Working Papers 568, Barcelona Graduate School of Economics.

ExpertIdeasBot (talk) 11:04, 28 May 2016 (UTC)

Dr. Blanchard's comment on this article

Dr. Blanchard has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:

The section ``Examples of stickiness needs work. Some of the examples are not of nominal stickiness, but real stickiness. The first paragraph in particular, which refers to employment stickiness, and ratchet effects, needs thorough rewriting.

We hope Wikipedians on this talk page can take advantage of these comments and improve the quality of the article accordingly.

Dr. Blanchard has published scholarly research which seems to be relevant to this Wikipedia article:

• Reference 1: Blanchard, Olivier J & Gali, Jordi, 2008. "Labour Markets and Monetary Policy: A New Keynesian Model with Unemployment," CEPR Discussion Papers 6765, C.E.P.R. Discussion Papers.

• Reference 2: Blanchard, Olivier J & Gali, Jordi, 2008. "The Macroeconomic Effects of Oil Shocks: Why are the 2000s so Different from the 1970s?," CEPR Discussion Papers 6631, C.E.P.R. Discussion Papers.

ExpertIdeasBot (talk) 15:40, 24 June 2016 (UTC)

Dr. Nakov's comment on this article

Dr. Nakov has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:

I don't quite get the structure. There are typos

We hope Wikipedians on this talk page can take advantage of these comments and improve the quality of the article accordingly.

We believe Dr. Nakov has expertise on the topic of this article, since he has published relevant scholarly research:

• Reference 1: Costain, James & Nakov, Anton, 2011. "Distributional dynamics under smoothly state-dependent pricing," Working Paper Series 1333, European Central Bank.

• Reference 2: Costain, James & Nakov, Anton, 2011. "Precautionary price stickiness," Working Paper Series 1375, European Central Bank.

• Reference 3: James Costain & Anton Nakov, 2009. "Dynamics of the price distribution in a general model of state-dependent pricing," Banco de Espaa Working Papers 0831, Banco de Espaa.

ExpertIdeasBot (talk) 01:00, 10 July 2016 (UTC)

Responses to ExpertideasBot

We now have three comments on the current article. I agree very much with Olivier Blanchard that we need more on examples of nominbal rigidity and not to mix up real and nominal. Dr Van Rens has also raised some excellent points: the need to include work on wages and also add Rational Inattention to the sticky information section. I think the Nakov comment indicates the need for a clearer structure. The current page has grown up organically, and needs some overall editing of the structure as well as the specific points raised.Byronmercury (talk) 10:27, 19 July 2016 (UTC)

New section on evidence for price stickiness to meet Blanchard. Will add some on wages laterByronmercury (talk) 13:44, 20 July 2016 (UTC)

Dr. Colciago's comment on this article

Dr. Colciago has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:

Nominal rigidity, also known as price-stickiness or wage-stickiness, describes a situation in which the nominal price is resistant to change.

I would rewrite

Nominal rigidity, also known as price-stickiness, describes a situation in which the nominal price is resistant to change. The same concept can be applied to nominal wages.

We hope Wikipedians on this talk page can take advantage of these comments and improve the quality of the article accordingly.

We believe Dr. Colciago has expertise on the topic of this article, since he has published relevant scholarly research:

• Reference : Ascari, Guido & Colciago , Andrea & Rossi, Lorenza, 2011. "Limited asset market participation: does it really matter for monetary policy?," Research Discussion Papers 15/2011, Bank of Finland.

ExpertIdeasBot (talk) 20:03, 24 September 2016 (UTC)

Keynes and nominal rigidity

The introduction of the article misstates Keynes's position on nominal rigidity. The article reads: "In his The General Theory of Employment, Interest and Money, John Maynard Keynes argued that nominal wages display downward rigidity, in the sense that workers are reluctant to accept cuts in nominal wages. This can lead to involuntary unemployment as it takes time for wages to adjust to equilibrium, a situation he thought applied to the Great Depression."

In fact, Keynes assiduously denied that involuntary unemployment would be remedied by wage flexibility. Much of the book is dedicated to constructing a theoretical apparatus that shows this notion (which he identified specifically with Pigou) to be fallacious. This is because a general reduction in money wages would reduce aggregate demand, limiting the extent of possible unemployment reduction. As Keynes writes in Chapter 19: "To suppose that a flexible wage policy is a right and proper adjunct of a system which on the whole is one of laissez-faire, is the opposite of the truth." He goes on to argue that "the maintenance of a stable general level of money-wages is, on a balance of considerations, the most advisable policy for a closed system."

The introduction should be rewritten to properly reflect Keynes's position, or to attribute the argument to Pigou instead. — Preceding unsigned comment added by 108.65.196.99 (talk) 04:48, 2 December 2020 (UTC)