The role of taxes as automatic destabilizers in New Keynesian economics

Henrik Jacobsen Kleven, Claus Thustrup Kreiner

Research output: Contribution to journalArticlepeer-review

7 Scopus citations

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 languageEnglish (US)
Pages (from-to)1123-1136
Number of pages14
JournalJournal of Public Economics
Volume87
Issue number5-6
DOIs
StatePublished - May 1 2003
Externally publishedYes

All Science Journal Classification (ASJC) codes

  • Finance
  • Economics and Econometrics

Keywords

  • Automatic stabilizers
  • New Keynesian economics
  • Taxation

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