Both time-series and cross-sectional regressions are estimated for 28 private two-digit standard industrial classification (S.I.C.) industries in the United States. Positive and negative aggregate demand shocks have varying effects on each of real output growth, nominal wage inflation, and price...

This paper investigates the implications of a sticky-wage contracting model that can explain both the decline in wage and price flexibility and the increased stability of the postwar American economy. The reduction in the size of demand shocks in the postwar period has increased agents'...

This paper examines determinants of private consumption in a sample of developing countries. The empirical model includes income, a proxy for the cost of consumption, and the exchange rate. Anticipated movements in these determinants are likely to trigger adjustment in planned consumption, while...

This paper examines the asymmetric effects of exchange rate fluctuations on real output and price in developing countries. The theoretical model decomposes movements in the exchange rate into anticipated and unanticipated components. Unanticipated currency fluctuations determine aggregate demand...

The main purposes of this article are 3-fold. First, we construct measures of real and nominal effective exchange rates for 14 Middle East and North African countries over the 1970-2004 period. Second, we test the validity of the Purchasing Power Parity (PPP) by applying the ADF and KPSS tests...

Using data for a sample of 50 developing countries, the empirical investigation evaluates determinants and implications of asymmetric price flexibility. Price inflation is characterized by high flexibility to adjust towards full equilibrium. Further, price inflation accelerates flexibly with...

The relation between price flexibility and aggregate real stability has been subject to recent debate. Increased price flexibility decreases the response of real output to aggregate demand shifts and, in turn, is stabilizing. The increased flexibility may exacerbate, however, the size of demand...

The authors establish the theoretical connection between industrial labor and product markets within the contractual wage-rigidity new Keynesian explanation of business cycles. They estimate time-series and cross-sectional regressions for twenty-eight private two-digit (S.I.C.) industries and...

Using quarterly data for the United States, demand contraction exceeds expansion in the face of monetary and government spending shocks. Demand contraction in the face of government spending shocks, is absorbed in nominal wage and price deflation. The variability of government spending shocks...

The cyclical behavior of the real wage differentiates between the empirical validity of major new Keynesian sticky-wage and sticky-price explanations of business cycles. Across industries of the United States, an increase in price flexibility relative to wage flexibility correlates with a...