Abstract
Much theoretical effort has been devoted to finding an explanation of the various rigidities that we have identified in the specifications discussed in the previous chapters, which for a long time have been accepted as peculiar aspects of the functioning of the labor market. According to Blanchard (1990, p. 793), “… the crises of the 1970s arose not because the wage-price mechanism was in contradiction with the facts, but because its explanation of the facts was at variance with theory. Thus the reconstruction effort has been largely theoretical.”
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Ferri, P., Greenberg, E. (1992). Microfoundations of Labor Market Modeling. In: Wages, Regime Switching, and Cycles. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-77241-2_7
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