Janiaka, Alexandre and Santos-Monteiro, Paulo (2011) Towards a quantitative theory of automatic stabilizers : the role of demographics. Working Paper. Centre for Applied Economics, Chile. (Unpublished)

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Abstract

Employment volatility is larger for young workers than for prime aged. At the same time, in economies with high tax rates the share of total market hours supplied by the young workers is smaller. These two observations imply a negative correlation between government size (measured by the share of taxes in total output) and aggregate hours volatility. This paper assesses in a calibrated model the quantitative importance of these empirical facts to account for the relationship between government size and macroeconomic stability. The model accounts for at least 23% and as much as 55% of the relationship between output volatility and government size.

Item Type:	Working or Discussion Paper (Working Paper)
Subjects:	H Social Sciences > HB Economic Theory
Divisions:	Faculty of Social Sciences > Economics
Series Name:	CEA Working Papers
Publisher:	Centre for Applied Economics
Place of Publication:	Chile
Date:	November 2011
Number:	No.284
Status:	Not Peer Reviewed
Publication Status:	Unpublished
Access rights to Published version:	Open Access
Related URLs:	Organisation
URI:	http://wrap.warwick.ac.uk/id/eprint/45350

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