Imperfect Competition, Underemployment Equilibria and Fiscal Policy
AbstractIt is often claimed that the demand externality created by imperfect competition can provide an analytical basis for Keynesian fiscal policy prescriptions. Here this demand externality is embedded in a model of monopolistic competition where saving and employment are determined by optimizing choices. It turns out that underemployment equilibria do exist, that there is scope for fiscal intervention, but that Keynesian fiscal prescriptions are turned on their head. Thus, demand externalities among imperfect competitors do not provide a general theoretical basis for these prescriptions, unless supplemented by other deviations from the Walrasian standard in the labor or capital market. Copyright 1990 by Royal Economic Society.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Royal Economic Society in its journal The Economic Journal.
Volume (Year): 100 (1990)
Issue (Month): 401 (June)
Contact details of provider:
Postal: Office of the Secretary-General, School of Economics and Finance, University of St. Andrews, St. Andrews, Fife, KY16 9AL, UK
Phone: +44 1334 462479
Web page: http://www.res.org.uk/
More information through EDIRC
Other versions of this item:
- Pagano, Marco, 1989. "Imperfect Competition, Underemployment Equilibria and Fiscal Policy," CEPR Discussion Papers 280, C.E.P.R. Discussion Papers.
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Peter Skott & Soon Ryoo, 2013. "Public debt in an OLG model with imperfect competition: long-run effects of austerity programs and changes in the growth rate," UMASS Amherst Economics Working Papers 2013-10, University of Massachusetts Amherst, Department of Economics.
- Antulio N. Bomfim & Francis X. Diebold, 1997.
"Bounded rationality and strategic complementarity in a macroeconomic model: policy effects, persistence, and multipliers,"
97-18, Federal Reserve Bank of Philadelphia.
- Bomfim, Antulio N & Diebold, Francis X, 1997. "Bonded Rationality and Strategic Complementarity in a Macroeconomic Model: Policy Effects, Persistence and Multipliers," Economic Journal, Royal Economic Society, vol. 107(444), pages 1358-74, September.
- Antulio N. Bomfim & Francis X. Diebold, 1996. "Bounded Rationality and Strategic Complementarity in a Macroeconomic Model: Policy Effects, Persistence and Multipliers," NBER Working Papers 5482, National Bureau of Economic Research, Inc.
- Bomfim & Diebold, . "Bounded Rationality and Strategic Complementarity in a Macroeconomic Model: Policy Effects, Persistence and Multipliers," Home Pages 5482, University of Pennsylvania.
- Ulrich van Suntum, . "The Purchasing Power Argument – Could Rising Wages Foster Employment?," Working Papers 200126, Institute of Spatial and Housing Economics, Munster Universitary.
- Partha Sen, 2008.
"Fixed Costs, The Balanced-Budget Multiplier And Welfare,"
171, Centre for Development Economics, Delhi School of Economics.
- Partha Sen, 2009. "Fixed Costs, The Balanced Budget Multiplier And Welfare," The Japanese Economic Review, Japanese Economic Association, vol. 60(3), pages 395-404.
- Sen, Partha, 2002.
"Welfare-improving debt policy under monopolistic competition,"
Journal of Economic Dynamics and Control,
Elsevier, vol. 27(1), pages 143-156, November.
- Partha Sen, . "Welfare-Improving Debt Policy under Monopolistic Competition," EPRU Working Paper Series 94-07, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
- John, A. & Pecchenino, R. & Schmmelpfennig, D. & Schreft, S., 1990.
"External Increasing Returns , Short-Lived Agents and Long- Lived Waste,"
8903, Michigan State - Econometrics and Economic Theory.
- A. John & R. Pecchenino & D. Schimmelpfennig & S. Schreft, 1990. "External increasing returns, short-lived agents and long-lived waste," Working Paper 91-02, Federal Reserve Bank of Richmond.
- Cook, David, 2001. "Time to enter and business cycles," Journal of Economic Dynamics and Control, Elsevier, vol. 25(8), pages 1241-1261, August.
- Pichelmann, Karl & Schuh, Andreas-Ulrich, 1996. "The NAIRU - Concept: A Few Remarks," Economics Series 36, Institute for Advanced Studies.
- Ramser, Hans Jürgen, 1992. "Nicht-kompetitive Gütermärkte im makroökonomischen Modell," Discussion Papers, Series 1 263, University of Konstanz, Department of Economics.
- Amedeo Panci, 1999. "Multiple equilibria: coordination failure and endogenous cycle," Working Papers 30, University of Rome La Sapienza, Department of Public Economics.
- Maria Scattaglia, 1994. "Politiche per l'occupazione e Microfondamenti "Keynesiani" dell'economia del lavoro," Working Papers 196, Dipartimento Scienze Economiche, Universita' di Bologna.
- Akram,Q.F. & Nymoen,R., 2001. "Employment behaviour in slack and tight labour markets," Memorandum 27/2001, Oslo University, Department of Economics.
- Emanuela Randon, . "Multiple Equilibria with Externalities," Discussion Papers 04/09, Department of Economics, University of York.
- Peter Skott & Soon Ryoo, 2012. "Public Debt and Functional Finance in an OLG Model with Imperfect Competition," UMASS Amherst Economics Working Papers 2012-10, University of Massachusetts Amherst, Department of Economics.
- van Suntum, Ulrich, 2008. "The purchasing power argument: Could rising wages foster employment?," CAWM Discussion Papers 2, Center of Applied Economic Research Münster (CAWM), University of Münster.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing) or (Christopher F. Baum).
If references are entirely missing, you can add them using this form.