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Balanced budget multiplier with indirect taxes under imperfect competition

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  • Ramón J. Torregrosa Montaner

    (Universidad de Salamanca)

Abstract

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.

Suggested Citation

  • Ramón J. Torregrosa Montaner, 2003. "Balanced budget multiplier with indirect taxes under imperfect competition," Estudios Económicos, El Colegio de México, Centro de Estudios Económicos, vol. 18(1), pages 3-13.
  • Handle: RePEc:emx:esteco:v:18:y:2003:i:1:p:3-13
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    File URL: https://estudioseconomicos.colmex.mx/index.php/economicos/article/view/190/192
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    References listed on IDEAS

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    1. 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.
    2. Dixon, Huw, 1987. "A Simple Model of Imperfect Competition with Walrasian Features," Oxford Economic Papers, Oxford University Press, vol. 39(1), pages 134-160, March.
    3. Blanchard, Olivier Jean & Kiyotaki, Nobuhiro, 1987. "Monopolistic Competition and the Effects of Aggregate Demand," American Economic Review, American Economic Association, vol. 77(4), pages 647-666, September.
    4. Molana, Hassan & Moutos, Thomas, 1992. "A Note on Taxation, Imperfect Competition and the Balanced Budget Multiplier," Oxford Economic Papers, Oxford University Press, vol. 44(1), pages 68-74, January.
    5. Torregrosa, Ramon J., 1998. "On the monotonicity of balanced budget multiplier under imperfect competition," Economics Letters, Elsevier, vol. 59(3), pages 331-335, June.
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