Kiel Working Papers, Kiel Institute for World Economics
No 1550:
Firing Costs in a New Keynesian Model with Endogenous Separations
Dennis Wesselbaum
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
Keywords: Beveridge Curve, Productivity Dependent Firing Costs; (follow links to similar papers)
JEL-Codes: E24,; E62,; J64; (follow links to similar papers)
30 pages, September 2009
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