This paper provides a tractable dynamic stochastic general equilibrium framework with endogenous firm creation and destruction and variable technology utilization to analyze the macroeconomic impact of entry costs and fixed cost subsidies. Based on this setup, we revisit empirical and...

We use a New Keynesian DSGE model with search frictions on the housing market to evaluate how financing a labor tax reduction by higher property taxation affects the real economy and welfare. Search on the housing market enables us to explicitly model stocks and flows, which is necessary to...

How do labor market reforms affect international competitiveness and net foreign assets? To answer this question, we build a two-region RBC model with labor market frictions, idiosyncratic consumption risk, and limited cross-sectional heterogeneity to establish a direct link between labor market...

In a New Keynesian DSGE model with non-Ricardian consumers, we show that automatic stabilization according to a countercyclical spending rule following the idea of the debt brake is well suited both to steer the economy and in terms of welfare. In particular, the adjustment account set up to...

This paper uses an extended version of “FiMod—A DSGE Model for Fiscal Policy Simulations” (Stähler and Thomas Econ Model 29:239–261, <CitationRef CitationID="CR35">2012</CitationRef>) with endogenous job destruction decisions by private firms to analyze the effects of several currently discussed labor market reforms on the Spanish...</citationref>

In a dynamic model of fiscal policy, social polarization provokes a deficit bias. Policy advisors have recently proposed that governments running a deficit should be forced to generate additional tax revenue. We show that this deficit taxation reduces each group's spending bias today because it...

Labor market studies on the effects of minimum wages are typically confined to the sector or worker group directly affected. We present a two-sector search model in which one sector is more productive than the other one and thus, pays higher wages. In such a framework, setting a minimum wage in...

In a dynamic model of fiscal policy, social polarization provokes a deficit bias. Policy advisors have recently proposed that governments running a deficit should be forced to generate additional tax revenue. We show that this deficit taxation reduces the deficit bias as it internalizes the...