... through higher taxes, might have unintended consequences in economies with a significant informal sector, such as increased informality. However, the size of the informal economy shrinks due to a decrease in labor and capital income tax rates. The results also indicate that higher labor mobility amplifies...

...Ernil Sabaj Purpose The presence of heterogeneity in price stickiness has been previously shown to be the main determinant of the real effects of nominal shocks. The paper presents theoretical results that highlight the significance of labor mobility and intratemporal elasticity of substitution...