Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/25793 
Year of Publication: 
2006
Series/Report no.: 
CESifo Working Paper No. 1748
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
Cyclical components are analytically computed in a theoretical model of stochastic endogenous fluctuations and growth. Volatility is shown to depend on the speed of convergence of the cyclical component, the expected length of a cycle and on the altitude of the slump. Taxes affect these channels and can therefore explain cross-country differences and breaks over time in volatility. With exogenous sources of fluctuations, a special case of our model, decentralized factor allocation is efficient. With endogenous fluctuations and growth, decentralized factor allocation is inefficient and (time-invariant) taxes can (de-) stabilize the economy. No unambiguous link exists between volatility and welfare.
JEL: 
C65
E32
E62
H3
O33
Document Type: 
Working Paper
Appears in Collections:

Files in This Item:
File
Size
410.49 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.