Are firing costs important for business cycles? Lessons from Bulgaria (1999-2018)

Aleksandar Vasilev

Bulgarian Economic Papers from Faculty of Economics and Business Administration, Sofia University St Kliment Ohridski - Bulgaria // Center for Economic Theories and Policies at Sofia University St Kliment Ohridski

Abstract: We introduce firing costs into a real-business-cycle setup augmented with a detailed government sector. We calibrate the model to Bulgarian data for the period following the introduction of the currency board arrangement (1999-2018). We investigate the importance of such labor market frictions for cyclical fluctuations in Bulgaria. Firing costs decrease employment volatility and pro-cyclicality, where both effects come at odds with data. Besides those, we do not find other important effects of firing costs for business cycle fluctuations in Bulgaria.

Keywords: business cycle fluctuations; labor markets; firing costs; Bulgaria. (search for similar items in EconPapers)
JEL-codes: E24 E32 (search for similar items in EconPapers)
Pages: 17 pages
Date: 2021-03, Revised 2021-03
New Economics Papers: this item is included in nep-bec, nep-dge, nep-eec, nep-mac and nep-tra
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Journal Article: Are Firing Costs Important for Business Cycles? Lessons from Bulgaria (1999–2018) (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:sko:wpaper:bep-2021-03

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