Does this statement hold in the new keynesian model

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Reference no: EM13897670

Keynes (1936) argued that, from a policy perspective, everything that can be achieved by a nominal wage cut can be more effectively achieved through an appropriate monetary policy.

(a) Does this statement hold in the de?cient-demand Keynesian model for a negative shock to (i) aggregate demand and (ii) aggregate labor productivity?

(b) Does this statement hold in the new Keynesian model for a negative shock to

(i) aggregate demand and

(ii) aggregate labor productivity?

Reference no: EM13897670

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