Externality in labor supply and government spending

Patrick Fève, Julien Matheron and Jean-Guillaume Sahuc

Economics Letters, 2011, vol. 112, issue 3, 273-276

Abstract: Standard business cycle models face difficulties generating (i) government spending multipliers exceeding unity and (ii) stabilizing effects of government size. Using a simple model with externality in labor supply, we show that a sufficient degree of complementarity between aggregate and private labor supplies is key to reproducing these stylized facts.

Keywords: Externality; Labor; supply; Government; spending; multiplier; Government; size (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (7)

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Working Paper: Externality in Labor Supply and Government Spending (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:112:y:2011:i:3:p:273-276

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