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Optimal labor income tax volatility with credit frictions

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Table 1: Optimal fiscal policy with credit frictions. The standard deviation of                             the U.S
Figure 1: Response to a TFP shock (percentage deviations from SS levels).
Figure 2: Response to a Government expenditure shock (percentage                                       deviations from SS levels)
Table 2 shows the results for unitary labor supply elasticity. I keep using a            elasticity behind the results of Table 1 is not significant for the main result of this relatively high labor supply elasticity to better account for the volatility of

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