Downward wage rigidity

Zero matters

The invention of the number zero transformed mathematics and laid the foundations for modern science. Zero is the additive identity (any number plus zero equals itself). It separates the positive and negative numbers. For a celebration of zero, see here.

Zero matters in economics, too.

Zero growth separates cyclical expansions and contractions. We need zeroes to measure the trillions of dollars of GDP, and even more zeroes to measure hyperinflations (during the record Hungarian inflation of 1945-46, the quantity of currency in circulation grew to a number with 27 zeroes). Most importantly, zero (or slightly less) marks the lower bound on nominal interest rates and a downward barrier for wage changes...

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