Please use this identifier to cite or link to this item: https://doi.org/10.1111/j.1468-2354.2012.00717.x
Title: Fiscal expansions, unemployment, and labor force participation: Theory and evidence
Authors: Brückner, M. 
Pappa, E.
Issue Date: Nov-2012
Citation: Brückner, M., Pappa, E. (2012-11). Fiscal expansions, unemployment, and labor force participation: Theory and evidence. International Economic Review 53 (4) : 1205-1228. ScholarBank@NUS Repository. https://doi.org/10.1111/j.1468-2354.2012.00717.x
Abstract: Structural VARs indicate that for many OECD countries labor force participation, employment, and the unemployment rate significantly increase following increases in government expenditures under a variety of specifications and identification schemes. Fiscal expansions also tend to increase real wages. Existing models have difficulties in generating such responses. We show that the empirical regularities can be reproduced with two additions into a standard New Keynesian model with matching frictions: (a) a labor force participation choice and (b) workers' heterogeneity. © (2012) by the Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.
Source Title: International Economic Review
URI: http://scholarbank.nus.edu.sg/handle/10635/124321
ISSN: 00206598
DOI: 10.1111/j.1468-2354.2012.00717.x
Appears in Collections:Staff Publications

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