Sticky wages in a world of ideas

Kevin X.D. Huang, Munechika Katayama, Mototsugu Shintani*, Takayuki Tsuruga

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review


This paper examines the implications of idea production and knowledge capital for monetary business cycles. We construct a sticky-wage model where workers produce goods based on firm-specific knowledge capital and researchers develop new ideas aided by economywide knowledge. As a quantitatively small group in the economy, researchers are inconsequential for the real effects of monetary shocks when the returns to research are low. However, when the returns to research are high, the result can be overturned. Monetary shocks can have significant real effects, even if wages are perfectly flexible for workers, who are quantitatively dominant in the economy.

Original languageEnglish
Pages (from-to)1757-1781
Number of pages25
JournalEconomic Inquiry
Issue number4
Publication statusPublished - 2022 Oct


  • ideas
  • knowledge capital
  • monetary neutrality
  • nonrivalry
  • sticky wages

ASJC Scopus subject areas

  • Business, Management and Accounting(all)
  • Economics and Econometrics


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