search query: @indexterm FISCAL POLICY / total: 505
reference: 94 / 505
| Author: | Harms, P. |
| Title: | The persistence of government expenditure shocks and the effect of monopolistic competition on the fiscal multiplier |
| Journal: | Oxford Economic Papers
2002 : JAN, VOL. 54:1, p. 44-55 |
| Index terms: | Competition Fiscal policy |
| Language: | eng |
| Abstract: | The authors demonstrate that the influence of monopolistic competition in the product market on an economy's impact response to fiscal shocks depends on the persistence of these shocks. While short -lived increases in lump-sum financed government expenditure have a stronger effect on labour supply if prices are above marginal costs, the response of employment decreases in the marup if shocks are highly persistent. However, they also show that, while the impact response of labour supply to temporary government expenditure shocks may be reduced by monopolistic competition, the fiscal multiplier is always higher if firms have market power. |
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