FIRING COSTS AND BUSINESS CYCLE FLUCTUATIONSInternational Economic Review, 2008, vol. 49, issue 1, pages 1-39 Abstract: This article considers a real business cycle model with establishment level dynamics and uses it to analyze the effects of firing taxes. It finds that firing taxes can have significant consequences on business cycle fluctuations, that the largest effects are on aggregate employment, and that even relatively small firing taxes have substantial effects. A significant contribution of the article is computational: It describes how to use standard linear-quadratic methods to solve for a stochastic equilibrium of an (S,s) economy with tax distortions. Copyright 2008 by the Economics Department Of The University Of Pennsylvania And Osaka University Institute Of Social And Economic Research Association. Date: 2008 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: http://EconPapers.repec.org/RePEc:ier:iecrev:v:49:y:2008:i:1:p:1-39 Ordering information: This journal article can be ordered from Access Statistics for this article International Economic Review is edited by Kenneth I. Wolpin More articles in International Economic Review from Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association |
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