Firing Costs and Business Cycle Fluctuations

33 Pages Posted: 11 Feb 2004

See all articles by Marcelo Veracierto

Marcelo Veracierto

Federal Reserve Bank of Chicago - Research Department

Multiple version iconThere are 2 versions of this paper

Date Written: December 2003

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.

Suggested Citation

Veracierto, Marcelo, Firing Costs and Business Cycle Fluctuations (December 2003). Available at SSRN: https://ssrn.com/abstract=486969 or http://dx.doi.org/10.2139/ssrn.486969

Marcelo Veracierto (Contact Author)

Federal Reserve Bank of Chicago - Research Department ( email )

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