Fiscal stimulus and labor market dynamics in Japan
Ryuta Kato and
Hiroaki Miyamoto
Journal of the Japanese and International Economies, 2013, vol. 30, issue C, 33-58
Abstract:
The paper studies the effects of fiscal expansion on the Japanese labor market. First, using a structural VAR model, we find that the unemployment rate falls and employment rises following an increase in government spending. We also find that fiscal expansion affects flows in and out of unemployment. While an increase in government spending increases the job-finding rate, it reduces the separation rate. We then incorporate search and matching frictions into a standard dynamic general equilibrium model, and study whether the model can explain what we observed in data. While the model fails to predict the exact size of the impact of government spending shocks on the Japanese labor market variables, it can consistently capture the empirical pattern of responses of labor market variables to shocks.
Keywords: Fiscal policy; Unemployment; Labor market; Search and matching (search for similar items in EconPapers)
JEL-codes: E24 E62 J64 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)
Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0889158313000464
Full text for ScienceDirect subscribers only
Related works:
Working Paper: Fiscal Stimulus and Labor Market Dynamics in Japan (2012) 
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:eee:jjieco:v:30:y:2013:i:c:p:33-58
DOI: 10.1016/j.jjie.2013.10.001
Access Statistics for this article
Journal of the Japanese and International Economies is currently edited by Takeo Hoshi
More articles in Journal of the Japanese and International Economies from Elsevier
Bibliographic data for series maintained by Catherine Liu ().