Effectiveness of Fiscal Policy in a Model of Imperfect Competition With Transactions Money

Hassan Molana

Australian Economic Papers, 2000, vol. 39, issue 1, 56-67

Abstract: This paper examines the effectiveness of fiscal policy in a general equilibrium macromodel with transactions money and an oligopolistic product market. The results suggest that although money may be neutral and play no direct role as a policy instrument, its indirect impact on the effectiveness of fiscal policy can be quite substantial. In particular, when money balances feature as a choice variable in the households' objective function, (i) fiscal policy becomes ineffective as the weight attached to money is reduced; (ii) the fiscal multiplier becomes negative when the elasticity of substitution between money and leisure exceeds unity; and (iii) it is possible that policy effects are in fact enhanced as the product market becomes more competitive.

Date: 2000
References: Add references at CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1111/1467-8454.00074

Related works:
Working Paper: Effectiveness of Fiscal Policy in a Model of Imperfect Competition with Transactions Money (1999)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:ausecp:v:39:y:2000:i:1:p:56-67

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0004-900X

Access Statistics for this article

Australian Economic Papers is currently edited by Daniel Leonard

More articles in Australian Economic Papers from Wiley Blackwell
Bibliographic data for series maintained by Wiley Content Delivery ().