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A fiscal stimulus and jobless recovery

"We analyse the effects of a government spending expansion in a DSGE model with Mortensen-Pissarides labour market frictions, deep habits in private and public consumption, investment adjustment costs, a constant-elasticity-of-substitution (CES) production function, and adjustments in employmen...

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Bibliographic Details
Main Authors: Cantore, Cristiano, Levine, Paul, Melina, Giovanni
Institution:ETUI-European Trade Union Institute
Format: TEXT
Language:English
Published: Washington, DC 2013
IMF
Subjects:
business cycle
economic model
fiscal policy
macroeconomics
public expenditure
unemployment
Online Access:https://www.labourline.org/KENTIKA-19128225124919464079-a-fiscal-stimulus-and-jobless-.htm
Description
Summary:"We analyse the effects of a government spending expansion in a DSGE model with Mortensen-Pissarides labour market frictions, deep habits in private and public consumption, investment adjustment costs, a constant-elasticity-of-substitution (CES) production function, and adjustments in employment both at the intensive as well as the extensive margin. The combination of deep habits and CES technology is crucial. The presence of deep habits magnifies the responses of macroeconomic variables to a fiscal stimulus, while an elasticity of substitution between capital and labour in the range of available estimates allows the model to produce a scenario compatible with the observed jobless recovery."
Physical Description:52 p.
Digital

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