Business Cycle Dynamics of a New Keynesian Overlapping Generations Model with Progressive Income Taxation
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.Download Info
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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 1692.Length:
Date of creation: 2006
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Handle: RePEc:ces:ceswps:_1692
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Keywords: fluctuations; unanticipated inflation; wealth distribution; income distribution; progressive income taxation; Calvo price staggering;Other versions of this item:
- Heer, Burkhard & Maußner, Alfred, 2012. "The Burden Of Unanticipated Inflation: Analysis Of An Overlapping-Generations Model With Progressive Income Taxation And Staggered Prices," Macroeconomic Dynamics, Cambridge University Press, vol. 16(02), pages 278-308, April.
- NEP-ALL-2006-04-08 (All new papers)
- NEP-CBA-2006-04-08 (Central Banking)
- NEP-MAC-2006-04-08 (Macroeconomics)
- NEP-PUB-2006-04-08 (Public Finance)
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"Forecasting and combining competing models of exchange rate determination,"
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