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Fiscal Spending and National Income with Imperfect Competition

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  • Chao, Chi-Chur
  • Yu, Eden S H

Abstract

In this paper, the authors examine fiscal policy effectiveness under oligopolistic competition and increasing returns to scale. Their results indicate that fiscal policy is always contractionary in a classical, full-employment economy. Similarly, fiscal policy can reduce national income in a Keynesian, unemployment model. Hence, fiscal policy may not be effective in promoting national income. Copyright 1996 by Blackwell Publishers Ltd and The Victoria University of Manchester

Suggested Citation

  • Chao, Chi-Chur & Yu, Eden S H, 1996. "Fiscal Spending and National Income with Imperfect Competition," The Manchester School of Economic & Social Studies, University of Manchester, vol. 64(4), pages 405-420, December.
    • Handle: RePEc:bla:manch2:v:64:y:1996:i:4:p:405-20
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