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Fiscal Policy under Imperfect Competition: A Survey

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  • Luís F. Costa
  • Huw Dixon

Abstract

This paper surveys the link between imperfect competition and the e¤ects of fiscal policy on output, employment and welfare. We examine static and dynamic models, with and without entry under a variety of assumptions using a common analytical framework. We find that in general there is a robust relationship between the fiscal multiplier and welfare, the tantalizing possibility of Pareto improving fiscal policy is much more elusive. In general, the mechanisms are supply side, and so welfare improving policy, whilst possible, is not a general result. Key words: Fiscal Policy; Imperfect Competition.

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Paper provided by ISEG - School of Economics and Management, Department of Economics, University of Lisbon in its series Working Papers Department of Economics with number 2009/25.

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Date of creation: Mar 2009
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Handle: RePEc:ise:isegwp:wp252009

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Postal: Department of Economics, ISEG - School of Economics and Management, University of Lisbon, Rua do Quelhas 6, 1200-781 LISBON, PORTUGAL
Web page: https://aquila1.iseg.ulisboa.pt/aquila/departamentos/EC

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Cited by:
  1. António Afonso & Luís Costa, 2010. "Market Power and Fiscal Policy in OECD Countries," Working Papers Department of Economics 2010/11, ISEG - School of Economics and Management, Department of Economics, University of Lisbon.
  2. Ryu-ichiro Murota & Yoshiyasu Ono, 2010. "A Reinterpretation of the Keynesian Consumption Function and Multiplier Effect," ISER Discussion Paper 0779, Institute of Social and Economic Research, Osaka University.

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