Towards a quantitative theory of automatic stabilizers: The role of demographics

Alexandre Janiak, Paulo Santos Monteiro

Research output: Contribution to journalArticlepeer-review


Employment volatility is larger for young and old workers than for the prime aged. At the same time, in countries with high tax rates, the share of total hours supplied by young/old workers is lower. These two observations imply a negative correlation between government size and business cycle volatility. This paper assesses in a heterogenous agent OLG model the quantitative importance of these two facts to account for the empirical relation between government size and macroeconomic stability.
Original languageEnglish
Pages (from-to)35-49
Number of pages15
JournalJournal of Monetary Economics
Early online date4 Jan 2016
Publication statusPublished - 1 Apr 2016

Bibliographical note

Accepted for publication on the 14/12/2015
This is an author produced version of a paper accepted for publication in Journal of Monetary Economics. Uploaded in accordance with the publisher's self-archiving policy.


  • Automatic stabilizers
  • Demographics
  • Distortionary taxes

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