Levine, Paul; McAdam, Peter; Pearlman, Joseph; Pierse, … - 2008
.Thusgiven
government spending as a proportion of GDP, the natural rate of output falls as market
power in output and labour markets … of output as a result
of four distortions: taxes, market power in the output and labour markets and external
habit.
10 … market power in
the output and labour markets, captured by the elasticities η ∈ (0,∞)andζ ∈ (0,∞)
respectively, drive the …