Efficiency wages and the balanced budget theorem
Macroeconomic literature has long agreed that the balanced budget multiplier is positive. By adopting the principal tenets of efficiency wage theories, this paper makes a new attempt to examine the validity of the balanced budget theorem. It is found that the impact of an expansion in government spending on output with a balanced government budget will definitely be contractionary in the presence of the efficiency wage consideration. Further, this paper also examines the role of alternative wage indexation rules on the validity of the balanced budget theorem. It is shown that the balanced budget theorem is not tenable when there is full indexation of wages. Copyright International Atlantic Economic Society 1999
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): 27 (1999)
Issue (Month): 3 (September)
|Contact details of provider:|| Postal: Suite 650, International Tower, 229 Peachtree Street, N.E., Atlanta, GA 30303|
Phone: (404) 965-1555
Fax: (404) 965-1556
Web page: http://springerlink.metapress.com/link.asp?id=112055
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Waller, Christopher J. & VanHoose, David D., 1989. "Endogenous wage indexation and optimal monetary policy with and without a balanced budget," Journal of Economics and Business, Elsevier, vol. 41(1), pages 21-31, February.
- George A. Akerlof & Andrew K. Rose & Janet L. Yellen, 1988. "Job Switching and Job Satisfaction in the U.S. Labor Market," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 19(2), pages 495-594.
- Smyth, David J, 1970. "Tax Changes Linked to Government Expenditure Changes and the Magnitude of Fluctuations in National Income," Journal of Political Economy, University of Chicago Press, vol. 78(1), pages 60-67, Jan.-Feb..
- Holmes, James M & Smyth, David J, 1972. "The Specification of the Demand for Money and the Tax Multiplier," Journal of Political Economy, University of Chicago Press, vol. 80(1), pages 179-85, Jan.-Feb..
- Bean, C R & Layard, P R G & Nickell, S J, 1986. "The Rise in Unemployment: A Multi-country Study," Economica, London School of Economics and Political Science, vol. 53(210(S)), pages S1-22, Supplemen.
- 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.
- 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.
- Solow, Robert M., 1979. "Another possible source of wage stickiness," Journal of Macroeconomics, Elsevier, vol. 1(1), pages 79-82.
- Waller, Christopher J., 1989. "Efficiency wages, wage indexation and macroeconomic stabilization," Economics Letters, Elsevier, vol. 30(2), pages 125-128, August.
- Daniel M.G. Raff & Lawrence H. Summers, 1986.
"Did Henry Ford Pay Efficiency Wages?,"
NBER Working Papers
2101, National Bureau of Economic Research, Inc.
- Jeffrey Sachs, 1980. "Wages, Flexible Exchange Rates, and Macroeconomic Policy," The Quarterly Journal of Economics, Oxford University Press, vol. 94(4), pages 731-747.
- Blinder, Alan S, 1988. "The Fall and Rise of Keynesian Economics," The Economic Record, The Economic Society of Australia, vol. 64(187), pages 278-94, December.
- Lawrence F. Katz, 1986.
"Efficiency Wage Theories: A Partial Evaluation,"
in: NBER Macroeconomics Annual 1986, Volume 1, pages 235-290
National Bureau of Economic Research, Inc.
- Lang, Kevin & Kahn, Shulamit, 1990. "Efficiency Wage Models of Unemployment: A Second View," Economic Inquiry, Western Economic Association International, vol. 28(2), pages 296-306, April.
- Assar Lindbeck & Dennis J. Snower, 1989. "The Insider-Outsider Theory of Employment and Unemployment," MIT Press Books, The MIT Press, edition 1, volume 1, number 026262074x, March.
- Yellen, Janet L, 1984. "Efficiency Wage Models of Unemployment," American Economic Review, American Economic Association, vol. 74(2), pages 200-205, May.
- Gray, Jo Anna, 1976. "Wage indexation: A macroeconomic approach," Journal of Monetary Economics, Elsevier, vol. 2(2), pages 221-235, April.
When requesting a correction, please mention this item's handle: RePEc:kap:atlecj:v:27:y:1999:i:3:p:314-324. 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: (Sonal Shukla)or (Rebekah McClure)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.