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...

We analyze the welfare cost of inflation in a model with cash-in-advance constraints and an endogenous distribution of establishments' productivities. Inflation distorts aggregate productivity through firm entry dynamics. The model is calibrated to the United States economy and the long-run...

There is substantial evidence of a negative correlation between government size and output volatility. We put forward the hypothesis that large governments stabilize output fluctuations because in economies with high tax rates the share of total market hours supplied by demographic groups...