Publication

This paper introduces productivity-dependent firing costs in an endogenous separation New Keynesian model. By strictly respecting the bonding critique, the author shows that firing costs tend to increase the performance of the model along the labor market dimension but fail along the persistence dimension. Furthermore, the study shows that on the one hand the model needs unrealistically high values of firing costs to generate the Beveridge curve, while on the other hand, the study is unable to find this relation in the data.