The persistence of government expenditure shocks and the effect of monopolistic competition on the fiscal multiplier
AbstractIn this paper, we demonstrate that the influence of monopolistic competition in the product market on an economy's impact response to fiscal shocks depends on the persistence of these shocks. While short-lived increases in lump-sum financed government expenditure have a stronger effect on labor supply if prices are above marginal costs, the response of employment decreases in the markup if shocks are highly persistent. However, we also show that, while the impact response of labor supply to temporary government expenditure shocks may be reduced by monopolistic competition, the fiscal multiplier is always higher if firms have market power. Copyright 2002, Oxford University Press.
Download InfoTo our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
Bibliographic InfoArticle provided by Oxford University Press in its journal Oxford Economic Papers.
Volume (Year): 54 (2002)
Issue (Month): 1 (January)
Contact details of provider:
Postal: Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK
Fax: 01865 267 985
Web page: http://oep.oupjournals.org/
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Costa, Luís F. & Dixon, Huw David, 2010.
"Fiscal policy under imperfect competition: A survey,"
Economics Discussion Papers, Kiel Institute for the World Economy
2010-14, Kiel Institute for the World Economy.
- Luís F. Costa & Huw Dixon, 2009. "Fiscal Policy under Imperfect Competition: A Survey," Working Papers Department of Economics, ISEG - School of Economics and Management, Department of Economics, University of Lisbon 2009/25, ISEG - School of Economics and Management, Department of Economics, University of Lisbon.
- Javier Andrés & José Emilio Boscá & Javier Ferri, 2011.
"Household Leverage and Fiscal Multipliers,"
Working Papers, International Economics Institute, University of Valencia
1103, International Economics Institute, University of Valencia.
- Javier Andrés & José Boscá & Francisco Ferri, 2012. "Household leverage and fiscal multipliers," Banco de Espaï¿½a Working Papers, Banco de Espaï¿½a 1215, Banco de Espa�a.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Oxford University Press) or (Christopher F. Baum).
If references are entirely missing, you can add them using this form.