Business Cycles and Fiscal Policy in an Open Economy
Do business cycle fluctuations leave a role and a welfare case for an active stabilization policy by means of fiscal policy instruments? We address this issue in a two-sector open economy model with price-taking firms and imperfect competition in the labour market. Fiscal policies are shown to affect the equilibrium distribution of prices and hence output in the case of both supply (productivity) and demand (preferences) shocks.
|Date of creation:||1998|
|Contact details of provider:|| Postal: Department of Economics, University of Oslo, P.O Box 1095 Blindern, N-0317 Oslo, Norway|
Phone: 22 85 51 27
Fax: 22 85 50 35
Web page: http://www.oekonomi.uio.no/indexe.html
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Elsevier, vol. 38(2), pages 245-268, October.
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- Campbell, John, 1994. "Inspecting the Mechanism: An Analytical Approach to the Stochastic Growth Model," Scholarly Articles 3196342, Harvard University Department of Economics.
- Charles P. Thomas, 1995. "The Role of Fiscal Policy in an Incomplete Markets Framework," Review of Economic Studies, Oxford University Press, vol. 62(3), pages 449-468.
- Charles P. Thomas, 1993. "The role of fiscal policy in an incomplete markets framework," International Finance Discussion Papers 451, Board of Governors of the Federal Reserve System (U.S.).
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