employment adjustment implies a key role for labour markets in determining shock propagation. We consider three policy … shock responses whereas employment subsidies weaken them. The tax instruments affect the degree to which the wage absorbs … is initially proportional, increasing progression is beneficial for output and employment and dampens shock responses of …

. We find that the business cycle dynamics in the OLG model in response to both a technology shock and a monetary shock are … hours in the OLG model decrease in response to a positive technological shock, since for young workers the income effect …

observed variables. Shock decompositions of the output and the inflation rate revealed the driving forces of the business …