Abstract
This paper analyses the effects of taxation in New Keynesian economics. The results show that taxes contribute to price and wage stickiness and, moreover, that the resulting fluctuations in welfare are magnified by the presence of taxes. These results are at odds with the old Keynesian idea of automatic stabilizers.
Original language | English (US) |
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Pages (from-to) | 1123-1136 |
Number of pages | 14 |
Journal | Journal of Public Economics |
Volume | 87 |
Issue number | 5-6 |
DOIs | |
State | Published - May 1 2003 |
Externally published | Yes |
All Science Journal Classification (ASJC) codes
- Finance
- Economics and Econometrics
Keywords
- Automatic stabilizers
- New Keynesian economics
- Taxation