Towards a quantitative theory of automatic stabilizers: The role of demographics
Alexandre Janiak; Paulo Santos Monteiro
Journal of Monetary Economics Volume 78, April 2016, Pages 35–49
Employment volatility is larger for young and old workers than for the prime aged. At the same time, in countries with high tax rates, the share of total hours supplied by young/old workers is lower. These two observations imply a negative correlation between government size and business cycle volatility. This paper assesses in a heterogeneous agent OLG model the quantitative importance of these two facts to account for the empirical relation between government size and macroeconomic stability.
Keywords: Automatic stabilizers; Distortionary taxes; Demographics
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Etiquetas: Automatic stabilizers; Distortionary taxes; Demographics