Fiscal Stimulus and Labor Market Policies in Europe

  title={Fiscal Stimulus and Labor Market Policies in Europe},
  author={Wolfgang Lechthaler},
  • Wolfgang Lechthaler
  • Published 2011
Several contributions have recently assessed the size of fiscal multipliers both in RBC models and New Keynesian models. This paper uses a labor selection model with labor turnover costs and Nash bargained wages to compute fiscal multipliers. The emergence of involuntary unemployment in the model enlarges the scope of the analysis. Shortand long-run multipliers are computed for five types of fiscal packages: pure demand stimuli and consumption tax cuts return very small multipliers; income tax… CONTINUE READING

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