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Author: | Rocheteau, G. |
Title: | Balanced-budget rules and interdeterminacy of the equilibrium unemployment rate |
Journal: | Oxford Economic Papers
1999 : JUL, VOL. 51:3, p. 399-409 |
Index terms: | ECONOMICS BUDGETARY CONTROL UNEMPLOYMENT EQUILIBRIUM ANALYSIS |
Language: | eng |
Abstract: | This study investigates a case of interdeterminacy of the equilibrium unemployment rate due to the financing of government expenditure. Under a balanced budgeting rule the existence of multiple equilibria is a generic property of the matching model of equilibrium unemployment, equilibria are Pareto-ranked, and endogenous cycles occur for some values of parameters. Goverment can lead the economy to a high equilibrium by fixing the tax level and matching its expenditure with its receipts. |
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