Frictional Unemployment and Fiscal Policy

Ryouichi Ikeda ()
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Ryouichi Ikeda: Graduate School of Economics, Osaka University

No 15-13, Discussion Papers in Economics and Business from Osaka University, Graduate School of Economics

Abstract: In this paper, following the previous researches and considering the ease of the analysis, I researched about the relationship between consumption tax hike and frictional unemployment and economic growth. The largest differences from previous researches are that in this paper I consider consumption tax hike and that I consider three cases in that consumption tax gained from the tax increase is (1)cash backed to the household in the lump-sum manner, (2)used in the increase of unemployment benefit and (3)decrease of the rate of other taxes. The effect of consumption tax hike to the growth rate and employment depends on how the increased consumption tax is used. Especially, the decrease of capital tax (corporate tax) has a positive effect to the growth rate but it fs because of that effect that it decreases the employment rate.

Keywords: consumption tax; corporate tax; tax reform; job search; frictional unemployment (search for similar items in EconPapers)
JEL-codes: H20 H30 H50 H55 J64 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2015-05
New Economics Papers: this item is included in nep-pbe
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Persistent link: https://EconPapers.repec.org/RePEc:osk:wpaper:1513

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