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Balanced budget multiplier with indirect taxes under imperfect competition

  • Ramón J. Torregrosa Montaner

    (Universidad de Salamanca)

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.

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File URL: http://codex.colmex.mx:8991/exlibris/aleph/a18_1/apache_media/82X8UNUKIV4YTLI53J4NNFHC5GCF6X.pdf
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Article provided by El Colegio de México, Centro de Estudios Económicos in its journal Estudios Económicos.

Volume (Year): 18 (2003)
Issue (Month): 1 ()
Pages: 3-13

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Handle: RePEc:emx:esteco:v:18:y:2003:i:1:p:3-13
Contact details of provider: Web page: http://www.colmex.mx/centros/cee/

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  1. 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.
  2. 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.
  3. Torregrosa, Ramon J., 1998. "On the monotonicity of balanced budget multiplier under imperfect competition," Economics Letters, Elsevier, vol. 59(3), pages 331-335, June.
  4. 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.
  5. Hart, Oliver, 1982. "A Model of Imperfect Competition with Keynesian Features," The Quarterly Journal of Economics, MIT Press, vol. 97(1), pages 109-38, February.
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