This paper deals with the emergence of price stickiness, that is nominal price elasticity below one, in the wake of nominal shocks. The setting of analysis is a general equilibrium model with both ambiguity and rational expectations. Ambiguity and macroeconomics are linked exploiting a...

This paper shows that ambiguity – as opposed to risk – may lead to sticky prices even with fully rational agents. Attitude towards ambiguity is assumed, as supported by theoretical literature and experimental evidence, to be asymmetric in the form of ambiguity aversion towards uncertain...

The Precautionary Principle has been proposed as the proper behaviour to adopt in the face of the new catastrophic risks that have made their appearance in the last decades. We advance a workable definition of the Precautionary Principle and apply it to the possible outbreak among humans of the...