By placing the great burden of macroeconomic adjustment on volumes rather than prices, nominal rigidities tend to increase – not decrease – the volatility of real activity that an economy would experience at any level of inflation volatility.
Susan Schmidt Bies: Capital and risk management Remarks by Ms Susan Schmidt Bies, Member of the Board of Governors of the US Federal Reserve System, at the Women in Housing and Finance Spring Symposium, Capital Issues for Financial Institutions, Washington, DC, 26 May 2005.