Structural analysis has concentrated – more fundamentally – on two related aspects. First, it has constructed measures of price and wage rigidity: these have been expressed by the frequency of price and wage adjustments.
In economies with more rigid goods and labour markets – where, for example, labour practices and contractual institutions hamper a prompt transmission of shocks to wages – the macroeconomic adjustment to shocks takes longer to run its course and, more importantly, falls disproportionately on production and employment. Second, structural analysis has provided evidence of the sensitivity of inflation expectations to past inflation developments.