Working Paper
Firing costs and business cycle fluctuations
Abstract: This paper evaluates to what extent the introduction of firing costs can affect the aggregate dynamics of a neoclassical growth model with heterogeneous establishments. Similarly to the previous literature, firing costs are found to have large steady-state effects. However, they have no important effects on business cycle dynamics: Aggregate employment fluctuations are somewhat smaller when the firing costs are introduced, but most of the effects turn out to be insignificant.
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Bibliographic Information
Provider: Federal Reserve Bank of Chicago
Part of Series: Working Paper Series
Publication Date: 2003
Number: WP-03-29