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Macroeconomic effects of shocks to public employment

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  • Linnemann, Ludger
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    Abstract

    The paper discusses the short-run relation between public and private employment. Empirical evidence is presented suggesting that in aggregate US time series, increases in government employment appear to generate temporarily positive responses of private employment and real output. Unlike in the case of shocks to government spending on goods, this contradicts the predictions of business cycle models based on the neoclassical growth model. It is explored in how far a model which includes the production of useful public services can potentially explain the qualitative properties of the evidence.

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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of Macroeconomics.

    Volume (Year): 31 (2009)
    Issue (Month): 2 (June)
    Pages: 252-267

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    Handle: RePEc:eee:jmacro:v:31:y:2009:i:2:p:252-267

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    Web page: http://www.elsevier.com/locate/inca/622617

    Related research

    Keywords: Fiscal policy shocks Public employment Government spending;

    References

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    Cited by:
    1. George Economides & Dimitris Papageorgiou & Apostolis Philippopoulos & Vanghelis Vassilatos, 2013. "Smaller Public Sectors in the Euro Area: Aggregate and Distributional Implications," CESifo Economic Studies, CESifo, vol. 59(3), pages 536-558, September.
    2. Steinar Holden & Victoria Sparrman, 2011. "Do Government Purchases Affect Unemployment?," CESifo Working Paper Series 3482, CESifo Group Munich.
    3. Lamo, Ana & Pérez, Javier J. & Schuknecht, Ludger, 2013. "Are government wages interlinked with private sector wages?," Journal of Policy Modeling, Elsevier, vol. 35(5), pages 697-712.

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