While a rigid economy has the tendency to react to external influences only with a substantial lag, and more so with respect to negative shocks than to  BIS Review 23/2004  1  positive ones, a more flexible economy reacts more rapidly and with less costs - such as an increase in unemployment or loss of output growth.
One reason for this may be seen in consumer habits, which vary from country to country. Another reason consists in diverging price trends, especially in the sector of non-tradable services or services of limited tradability. BIS Review 67/2002  1  As a consequence, euro-area real rates of interest vary quite considerably.