A commonly held view is that nominal rigidities are important for the transmission of monetary policy shocks. We argue that they are also important for understanding the dynamic effects of technology shocks, especially on labor hours, wages, and prices. Based on a dynamic general equilibrium...

The sticky-price theory has proved fairly successful in explaining the dynamic effects of technology shocks on employment, at least under weak accommodation of monetary policy to the shocks. Yet, when we extend the analysis to a broader set of labor market variables, including employment as well...

We develop and estimate a dynamic stochastic general equilibrium model that features sticky prices, a variable elasticity of demand facing firms and firm-specific labor. While reconciling to a good extent the micro and macro evidence on the behavior of prices, the model offers an accurate...