Market Structure and Fiscal Policy Effectiveness
In a monopolistic competition macromodel with endogenous market structure, the fiscal multiplier is shown to consist of two components. The first depicts the response of output to a fiscal expansion through the conventional channels that disregard the role of market imperfections. The second component captures the effects of firms' market power as well as the policy-induced change in market structure. The latter effect--which has not been taken into account in existing studies--is shown to be quite significant in raising the fiscal multiplier (even above unity) and in improving consumers' welfare when the labour market is competitive. Copyright 2001 by The editors of the Scandinavian Journal of Economics.
(This abstract was borrowed from another version of this item.)
|Date of creation:||Oct 1999|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: (01382) 344375
Fax: (01382) 344691
Web page: http://www.dundee.ac.uk/econman/
More information through EDIRC
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.:
- 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.
- Roeger, Werner, 1995. "Can Imperfect Competition Explain the Difference between Primal and Dual Productivity Measures? Estimates for U.S. Manufacturing," Journal of Political Economy, University of Chicago Press, vol. 103(2), pages 316-30, April.
- Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
- Graham, Fred C, 1995. "Government Debt, Government Spending, and Private-Sector Behavior: Comment," American Economic Review, American Economic Association, vol. 85(5), pages 1348-56, December.
- Norrbin, S.C., 1993.
"The Relation Between Price and Marginal Cost in U.S. Industry: A Contradiction,"
1993_05_04, Department of Economics, Florida State University.
- Norrbin, Stefan C, 1993. "The Relation between Price and Marginal Cost in U.S. Industry: A Contradiction," Journal of Political Economy, University of Chicago Press, vol. 101(6), pages 1149-64, December.
- Heijdra, Ben J & Ligthart, Jenny E & van der Ploeg, Frederick, 1998. "Fiscal Policy, Distortionary Taxation, and Direct Crowding Out under Monopolistic Competition," Oxford Economic Papers, Oxford University Press, vol. 50(1), pages 79-88, January.
- 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.
- 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.
- Kuehlwein, Michael, 1998. "Evidence on the substitutability between government purchases and consumer spending within specific spending categories," Economics Letters, Elsevier, vol. 58(3), pages 325-329, March.
- Catherine J. Morrison, 1990. "Market Power, Economic Profitability and Productivity Growth Measurement: An Integrated Structural Approach," NBER Working Papers 3355, National Bureau of Economic Research, Inc.
- Silvestre, J., 1991.
"The Market-Power Foundations of Macroeconomic Policy,"
374, California Davis - Institute of Governmental Affairs.
- Silvestre, Joaquim, 1993. "The Market-Power Foundations of Macroeconomic Policy," Journal of Economic Literature, American Economic Association, vol. 31(1), pages 105-41, March.
- Kiminori Matsuyama, 1995.
"Complementarities and Cumulative Processes in Models of Monopolistic Competition,"
Journal of Economic Literature,
American Economic Association, vol. 33(2), pages 701-729, June.
- Kiminiori Matsuyama, 1994. "Complementaries and Cumulative Processes In Models of Monopolistic Competition," Discussion Papers 1106, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Zhang, J., 1998. "Global behaviour of a system with imperfect private-public substitutability," Journal of Public Economics, Elsevier, vol. 67(3), pages 437-454, March.
- N. Gregory Mankiw, 1987.
"Imperfect Competition and the Keynesian Cross,"
NBER Working Papers
2386, National Bureau of Economic Research, Inc.
- Startz, Richard, 1989. "Monopolistic Competition as a Foundation for Keynesian Macroeconomic Models," The Quarterly Journal of Economics, MIT Press, vol. 104(4), pages 737-52, November.
- Karras, Georgios, 1994. "Government Spending and Private Consumption: Some International Evidence," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 26(1), pages 9-22, February.
- Gali, Jordi, 1995.
"Product diversity, endogenous markups, and development traps,"
Journal of Monetary Economics,
Elsevier, vol. 36(1), pages 39-63, August.
- Gali, Jordi, 1995. "Product Diversity, Endogenous Markups and Development Traps," Working Papers 95-09, C.V. Starr Center for Applied Economics, New York University.
- 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.
- repec:ner:tilbur:urn:nbn:nl:ui:12-376256 is not listed on IDEAS
- repec:cup:cbooks:9780521479479 is not listed on IDEAS
- Aschauer, David Alan, 1985. "Fiscal Policy and Aggregate Demand," American Economic Review, American Economic Association, vol. 75(1), pages 117-27, March.
- Dixon, Huw & Lawler, Phillip, 1996. " Imperfect Competition and the Fiscal Multiplier," Scandinavian Journal of Economics, Wiley Blackwell, vol. 98(2), pages 219-31, June.
When requesting a correction, please mention this item's handle: RePEc:dun:dpaper:104. 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: (Andrzej Kwiatkowski)
If references are entirely missing, you can add them using this form.