MIXED INDUSTRIAL STRUCTURE AND SHORT‐RUN FISCAL MULTIPLIER
Roberto Censolo and
Caterina Colombo (caterina.colombo@unife.it)
Australian Economic Papers, 2008, vol. 47, issue 2, 156-165
Abstract:
Existing studies on the fiscal multiplier under imperfect competition assume a symmetric market structure with identical firms. This paper examines the fiscal policy implications of introducing a multisectoral economy, where a composite commodity is offered in many varieties within a market of monopolistic competition and a homogeneous good is produced in a perfectly competitive environment. Within the context of this mixed industrial structure we show that the size of the short‐run multiplier crucially depends on the composition of public expenditure chosen by the government.
Date: 2008
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https://doi.org/10.1111/j.1467-8454.2008.00338.x
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Persistent link: https://EconPapers.repec.org/RePEc:bla:ausecp:v:47:y:2008:i:2:p:156-165
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