Keynesian Multipliers and the Cost of Public Funds under Monopolistic Competition
The authors extend macroeconomic models of imperfect competition with Keynesian features to allow for nonunitary elasticities between leisure and consumption and the effect of product variety on multipliers and welfare. Provided preference for diversity is sufficiently strong, the real national income multiplier for a given rise in real public spending is larger under free than under restricted entry and exit of firms. This implies a procyclical real consumer wage. With lump-sum taxes, the marginal cost of public funds is below unity. Optimal public spending may be countercyclical. More priority for public goods raises the long-run cost of public funds. Copyright 1996 by Royal Economic Society.
If 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.
Volume (Year): 106 (1996)
Issue (Month): 438 (September)
|Contact details of provider:|| Postal: Office of the Secretary-General, Rm E35, The Bute Building, Westburn Lane, St Andrews, KY16 9TS, UK|
Phone: +44 1334 462479
Web page: http://www.res.org.uk/
More information through EDIRC
|Order Information:||Web: http://www.blackwellpublishers.co.uk/asp/journal.asp?ref=0013-0133|
When requesting a correction, please mention this item's handle: RePEc:ecj:econjl:v:106:y:1996:i:438:p:1284-96. See general information about how to correct material in RePEc.
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.