This paper explores how revenue-neutral tax reforms impact employment and economic growth in a model of endogenous growth and search frictions on the labor market. We analyze how savings and the incentive to create new jobs are affected by tax swaps between wage income taxes, payroll taxes,...

The paper explores the interaction between debt crises and devaluation. Since the optimal level of devaluation in a crisis depends on the level of debt that has to be serviced, a default makes a devaluation less likely. Expected devaluation depends thus on expectations about default which is...

We study the effects of FDI and increasing multinational activity utilizing a macroeconomic two-sector model of the small open economy with flexible exchange rates and perfect capital mobility. The focus is on horizontal greenfield investment and its impact on production, exchange rates, trade,...

This paper develops a business cycle model with a financial intermediation sector. Financial wealth is defined as a predetermined state variable. Both, the additional sector of financial intermediaries and predetermination of financial wealth, affect the demand for real financial wealth. If real...

After greenhouse gas emission trading on country level had been proposed by the Kyoto Protocol agreed on in 1997, a discussion on the introduction of national schemes with entities as participants ensued. This discussion also raised the question if and how such systems can be linked. We first...

A two sector small open economy model developed by Corden (1991, 2002) is used to analyse the impact of sudden stops in capital inflows on an internal and external equilibrium and to explore the merits of disposing of the nominal exchange rate as policy tool in rectifying real exchange rate...

How does technical progress affect long-term unemployment in a small open economy? This relationship is evaluated in an open neoclassical growth model that is extended by a Pissarides-style labor market matching approach. In the general equilibrium model, the labor market of the three factor...

In this paper we find evidence that the new economic geography approach is able to describe and explain the spatial characteristics of an economy, in our case the German economy. Using German district data we estimate the structural parameters of a new economic geography model as developed by...

The question of how to share the costs of the measures to be taken against global warming is one of the most controversial questions in the international climate policy debate, and is, as yet, unsettled. The burden sharing agreement (BSA) reached by EU Member States is a rare example of a...