Externality in labor supply and government spending
AbstractStandard business cycle models face difficulties generating (i) government spending multipliers exceeding unity and (ii) stabilizing effects of government size. Using a simple model with externality in labor supply, we show that a sufficient degree of complementarity between aggregate and private labor supplies is key to reproducing these stylized facts.
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Bibliographic InfoArticle provided by Elsevier in its journal Economics Letters.
Volume (Year): 112 (2011)
Issue (Month): 3 (September)
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Web page: http://www.elsevier.com/locate/ecolet
Externality Labor supply Government spending multiplier Government size;
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