Purpose: This paper explores the effects of fiscal policy in an economy with reciprocity in labor relations and fair wages, consumption taxes and a common income tax rate in place. Design/methodology/approach: To this end, a dynamic general-equilibrium model with government sector is calibrated...

Purpose: We augment an otherwise standard business cycle model with a richer government sector, and add money-in-utility (MIU) considerations to study economic fluctuations. Design/methodology/approach: More specifically, real money balances enter in a non-separable way with consumption and...