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Firing Costs in a New Keynesian Model with Endogenous Separations

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Author Info
Dennis Wesselbaum

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Abstract

This paper introduces productivity dependent firing costs in an endogenous separation New Keynesian model. By strictly respecting the bonding critique, we show that firing costs tend to increase the performance of the model along the labor market dimension but fail along the persistence dimension. Furthermore, we show that on the one hand the model needs high - unrealistic high - values of the firing costs to generate the Beveridge curve while on the other hand we are not able to find this relation in the data

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File URL: http://www.ifw-members.ifw-kiel.de/publications/firing-costs-in-a-new-keynesian-model-with-endogenous-separations/kwp-1550
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Paper provided by Kiel Institute for the World Economy in its series Kiel Working Papers with number 1550.

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Length: 30 pages
Date of creation: Sep 2009
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Handle: RePEc:kie:kieliw:1550

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Related research
Keywords: Beveridge Curve; Productivity Dependent Firing Costs;

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Find related papers by JEL classification:
E24 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
J64 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Unemployment: Models, Duration, Incidence, and Job Search

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