Government Spending and the Income-Expenditure Model: The Multiplier, Spending Composition, and Job Guarantee Programs

Thomas Palley

No 30-2018, FMM Working Paper from IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute

Abstract: This paper reconstructs the income - expenditure (IE) model to include a distinction between government purchases of output versus government production. The distinction has important consequences for output and employment multipliers. The paper also extends the IE model to incorporate a government job guarantee program (JGP), and the extended model illuminates the automatic stabilizer properties of a JGP. The model is then extended to include Kaleckian income distribution effects. That generates a novel Kaleckian balanced budget multiplier driven by changed composition of government spending. The paper concludes with some economic and political economy concerns about a JGP that are flagged by the model.

Keywords: Government spending; spending composition; balanced budget multiplier; job guarantee program (search for similar items in EconPapers)
JEL-codes: E10 E12 E62 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2018
New Economics Papers: this item is included in nep-mac and nep-pke
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:imk:fmmpap:30-2018

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