NEAR-RATIONALITY MENU COSTS, STRATEGIC COMPLEMENTARITY, AND REAL RIGIDITY - AN INTEGRATION

This paper integrates near-rationality/menu cost ideas with strategic complementarity and real rigidity. it is shown that both strategic com plementarity and real rigidity aggravate nominal rigidity and make mon etary nonneutrality more potent Also, real rigidity causing nominal ri gidity is equivalent to Strategic complementarity causing nominal rigi dity. Though much has been written about these concepts and their macr oeconomic significance, an obvious integration is lacking. This paper is an attempt in that direction.