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Inefficient continuation decisions, job creation costs, and the cost of business cycles

Abstract:

This paper develops a model according to which the costs of business cycles are nontrivial because they reduce the average level of output. The reason is an interaction between job creation costs and an agency problem. The agency problem triggers separations during economic downturns even though both the employer and the worker would be better off if the job was not discontinued, that is, affected jobs have strictly positive surplus values. Similarly, booms make it possible for more jobs to o...

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Publication status:
Published
Peer review status:
Peer reviewed

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Files:
Publisher copy:
10.3982/QE253

Authors


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Institution:
University of Oxford
Division:
SSD
Department:
Economics
Oxford college:
Christ Church
Role:
Author
Publisher:
Wiley Publisher's website
Journal:
Quantitative Economics Journal website
Volume:
5
Issue:
2
Pages:
297-349
Publication date:
2014-07-21
DOI:
EISSN:
1759-7331
ISSN:
1759-7323
Keywords:
Subtype:
Scholarly edition
Pubs id:
pubs:733139
UUID:
uuid:1263dea7-71c9-41a1-bab8-5a09053b3b12
Local pid:
pubs:733139
Source identifiers:
733139
Deposit date:
2017-11-23

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