Fixed Costs, The Balanced Budget Multiplier And Welfare
AbstractIn a two-sector model, where one of the sectors is monopolistically competitive and subject to increasing returns to scale but without love for variety, we analyze the effects of a balanced budget fiscal expansion. Such an expansion could increase the welfare of the representative individual, if elasticities of substitution in production and consumption are low. A reorganization of production takes place--increasing returns enabling a rise in real income.
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Bibliographic InfoArticle provided by Japanese Economic Association in its journal Japanese Economic Review.
Volume (Year): 60 (2009)
Issue (Month): 3 ()
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Other versions of this item:
- Partha Sen, 2008. "Fixed Costs, The Balanced-Budget Multiplier And Welfare," Working papers 171, Centre for Development Economics, Delhi School of Economics.
- E1 - Macroeconomics and Monetary Economics - - General Aggregative Models
- E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
- L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
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