search query: @indexterm BUSINESS CYCLES / total: 529
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Author: | Heijdra, B. J. Ploeg, F. van der |
Title: | Keynesian multipliers an d the cost of public funds under monopolitic competition. |
Journal: | Economic Journal
1996 : SEP, VOL. 106:438, p. 1284-1296 |
Index terms: | MACROECONOMIC MODELS KEYNESIAN SCHOOL BUSINESS CYCLES COMPETITION MONOPOLY PRODUCTION MODELS |
Language: | eng |
Abstract: | We extend macroeconomic models of imperfect competition with Keynesian features to allow for non-unitary elasticies between leisure and consumtion and the effect of product variety on multipliers and welfare. Provided preference for diversity is sufficiently strong, the real national income multiplier for a given rise in real public spending is larger under free than under restricted entry and exit of firms. This implies a pro-cyclical real consumer wage. With lump-sum taxes the marginal cost of public funds is below unity. Optimal public spending may be counter-cyclical. More priority for public goods raises the long-run cost of public funds. |
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