Business cycles with distorting taxes and disaggregated capital markets

Article Abstract:

The existence of business cycles in an economic environment characterized by distortionary corporate and personal taxation is discussed via a neoclassical growth model. Recursive techniques are used to solve for decision rules. Results of the application of the model show that corporate taxes more than personal taxes exert a significant effect on the performance of business cycles. Furthermore, disaggregated investment was found to be vulnerable to changes in investment tax credit.

Taxation

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Ex post heterogeneity and the business cycle

Article Abstract:

The indivisible labor model is modified to include temporary heterogeneity in individual skills. The modification extends the representative agent framework, thus allowing the model to consider multi-skilled workers as a factor affecting output and other variables. The results confirm the importance of heterogeneity in influencing the volatility and comovement of output and other variables. The average quality variation reached 16%-30% of the output volatility.

Workers

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