Balanced budget multiplier with indirect taxes under imperfect competition
This paper presents two counter-examples to the Keynesian features attributed to imperfect competition in general equilibrium models. In particular, by considering indirect tax rates, a non positive and monotonically non-increasing relationship between the magnitude of both the balanced budget and welfare multipliers and market-power is obtained.
Volume (Year): 18 (2003)
Issue (Month): 1 ()
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- Dixon, Huw, 1987. "A Simple Model of Imperfect Competition with Walrasian Features," Oxford Economic Papers, Oxford University Press, vol. 39(1), pages 134-60, March.
- Hassan Molana & Thomas Moutos, 1991.
"A Note on Taxation, Imperfect Competition and the Balanced Budget Multiplier,"
Working Papers Series
91/4, University of Stirling, Division of Economics.
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- Oliver Hart, 1982. "A Model of Imperfect Competition with Keynesian Features," The Quarterly Journal of Economics, Oxford University Press, vol. 97(1), pages 109-138.
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- Blanchard, Olivier Jean & Kiyotaki, Nobuhiro, 1987. "Monopolistic Competition and the Effects of Aggregate Demand," American Economic Review, American Economic Association, vol. 77(4), pages 647-66, September.
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