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Frictional Unemployment and Fiscal Policy

Author

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  • Ikeda Ryouichi

    (Graduate School of Economics, Osaka University)

Abstract

In this paper, following the previous researches and considering the ease of the analysis, I researched about the relationship between consumption tax hike and frictional unemployment and economic growth. The largest differences from previous researches are that in this paper I consider consumption tax hike and that I consider three cases in that consumption tax gained from the tax increase is (1)cash backed to the household in the lump-sum manner, (2)used in the increase of unemployment benefit and (3)decrease of the rate of other taxes. The effect of consumption tax hike to the growth rate and employment depends on how the increased consumption tax is used. Especially, the decrease of capital tax (corporate tax) has a positive effect to the growth rate but it fs because of that effect that it decreases the employment rate.

Suggested Citation

  • Ikeda Ryouichi, 2015. "Frictional Unemployment and Fiscal Policy," Discussion Papers in Economics and Business 15-13, Osaka University, Graduate School of Economics.
    • Handle: RePEc:osk:wpaper:1513
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    File URL: http://www2.econ.osaka-u.ac.jp/library/global/dp/1513.pdf
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    More about this item

    Keywords

    consumption tax; corporate tax; tax reform; job search; frictional unemployment;
    All these keywords.

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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