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http://dspace.mediu.edu.my:8181/xmlui/handle/10419/19125| Title: | Fiscal policy, monopolistic competition, and finite lives |
| Keywords: | E12 L16 E63 ddc:330 fiscal policy output multipliers Yaari-Blanchard model overlapping generations monopolistic competition love of variety Finanzpolitik Multiplikator Monopolistischer Wettbewerb Overlapping Generations Theorie Finanzierung Theorie |
| Issue Date: | 16-Oct-2013 |
| Publisher: | |
| Description: | The paper studies the short-run, transitional, and long-run output effects of permanent and temporary shocks in public consumption under various financing methods. To this end, a dynamic macroeconomic model for a closed economy is developed, which features a perfectly competitive final goods sector and a monopolistically competitive intermediate goods sector. Finitely lived households consume final goods, supply labor, and save part of their income. Amongst the findings for a permanent rise in public consumption are: (i) monopolistic competition increases the absolute value of the balanced-budget output multiplier; (ii) positive long-run output multipliers are obtained only if the generational turnover effect is dominated by the intertemporal labor supply effect; (iii) short-run out- put multipliers under lump-sum tax financing are smaller than long-run output multipliers if labor supply is elastic; and (iv) bond financing reduces the size of long-run output multipliers as compared to lump-sum tax financing and may give rise to non-monotonic adjustment paths if labor supply is sufficiently elastic and the speed of adjustment of lump-sum taxes is not too high. Temporary bondfinanced fiscal shocks are shown to yield: (i) permanent effects on output; and (ii) negative long-run output multipliers. |
| URI: | http://koha.mediu.edu.my:8181/xmlui/handle/10419/19125 |
| Other Identifiers: | http://hdl.handle.net/10419/19125 ppn:510018335 |
| Appears in Collections: | EconStor |
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