We present a new partial equilibrium theory of price adjustment, based on consumer loss aversion. In line with prospect … theory, the consumers’ perceived utility losses from price increases are weighted more heavily than the perceived utility … an otherwise standard dynamic neoclassical model of monopolistic competition. The resulting theory of price adjustment is …

We present a new partial equilibrium theory of price adjustment, based on consumer loss aversion. In line with prospect … theory, the consumers’ perceived utility losses from price increases are weighted more heavily than the perceived utility … an otherwise standard dynamic neoclassical model of monopolistic competition. The resulting theory of price adjustment is …

In a multi-country general equilibrium economy with mobile capital and rigid-wage unemployment, countries may differ in … conditions under which - in contrast to free trade with undistorted labor markets - welfare declines and unemployment increases …

downward rigidity, and magnifying the response of unemployment to negative shocks. We also consider layoffs and show that for a …

equilibrium model of wage dynamics and unemployment. The model is developed under the assumption of worker mobility, so that … Beaudry and DiNardo (1991). We solve for the dynamics of wages and unemployment, and show that real wages do not necessarily … to match actual unemployment and wage series. We also show that equal treatment follows in our model from the assumption …