Business Cycle Dynamics of a New Keynesian Overlapping Generations Model with Progressive Income Taxation

Burkhard Heer and Alfred Maussner ()

No 1692, CESifo Working Paper Series from CESifo

Abstract: In our dynamic optimizing sticky price model, agents are heterogeneous with regard to their age and their productivity. We find that the business cycle dynamics in the OLG model in response to both a technology shock and a monetary shock are similar, but not completely identical to those found in the corresponding representative-agent model. In particular, working hours in the OLG model decrease in response to a positive technological shock, since for young workers the income effect dominates the substitution effect. This is in line with the adverse effect of productivity shocks on employment found in structural vector autoregressions.

Keywords: fluctuations; unanticipated inflation; wealth distribution; income distribution; progressive income taxation; Calvo price staggering (search for similar items in EconPapers)
Date: 2006
New Economics Papers: this item is included in nep-cba, nep-mac and nep-pub
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_1692

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