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On the Introduction of Firing Costs

  • Steffen Ahrens
  • Dennis Wesselbaum

This paper provides a survey of the recent literature about firing costs and discusses the transmission channels of firing costs in a partial equilibrium context. In addition, we expand our analysis two types of firing costs in a New Keynesian model with purely endogenous separations. We further distinguish between the effects resulting from respecting and non-respecting the bonding critique. We find that the two types of firing costs do not show significant differences. However, respecting the bonding critique enhances the overall performance of the model

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Paper provided by Kiel Institute for the World Economy in its series Kiel Working Papers with number 1559.

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Length: 36 pages
Date of creation: Oct 2009
Handle: RePEc:kie:kieliw:1559
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