because the marginal tax rates, in general equilibrium, impact wages, and hence individual utility. The “progressivity” effect …

11%, but price permanent worker differences, a large contributor (32%) to variations in wages. A large share of the …

. Government incentives to production may alleviate high unemployment in this economy, but at the cost of exacerbating sclerosis …

recovered but unemployment lingered). This paper presents a model that captures these three facts. The key elements of the model …

This paper develops a model with multiple steady states (low tax and low unemployment versus high tax and high … unemployment) in which equilibrium selection is not conditioned on a sunspot variable. Instead, large temporary shocks initiate … possible that the transition to the high-unemployment steady state after a negative shock can be avoided if the government …