Purpose Working time accounts (WTAs) allow firms to smooth hours worked over time. The purpose of this paper is to analyze whether this increase in flexibility has also affected how firms adjust employment in Germany over the business cycle. Design/methodology/approach This paper uses rich...

Several contributions have recently assessed the size of fiscal multipliers both in RBC models and in New Keynesian models. This paper computes fiscal multipliers within a labor selection model with turnover costs and Nash bargained wages. We find that demand stimuli yield small multipliers, as...

This paper sheds new light on the effects of the minimum wage on employment from a two-sided theoretical perspective, in which firms’ job offer and workers’ job acceptance decisions are disentangled. Minimum wages reduce job offer incentives and increase job acceptance incentives. We show...

This paper shows that announced credible disinflations under inflation targeting lead to a boom in a standard New Keynesian model (i.e. a disinflationary boom). This finding is robust with respect to various parameterizations and disinflationary experiments. Thus, it differs from previous...

The labor market in Germany is more sclerotic and volatile than in the US. We show theoretically that sclerosis and large volatilities are two sides of the same coin. Both may be driven by large hiring costs and low quit rates.

Based on a quarterly regulatory dataset for German banks from 1999 to 2004, this article analyses the effects of banks' regulatory capital on the transmission of monetary policy in a system of liquidity networks. The dynamic panel regression results provide evidence in favour of the bank capital...

What are the challenges that globalization makes on welfare states and how should welfare states respond? How should welfare states be designed to enable countries to reap the benefits of globalization? These are the main themes of Hans-Werner Sinn's book, Can Germany Be Saved? We view Germany...

This paper presents a theory explaining the labor market matching process through microeconomic incentives. There are heterogeneous variations in the characteristics of workers and jobs, and firms face adjustment costs in responding to these variations. Matches and separations are described...

This paper explores the influence of wage and price staggering on monetary persistence. We show that, for plausible parameter values, wage and price staggering are highly complementary in generating monetary persistence. We do so by proposing the new measure "quantitative persistence," after...