Economics at your fingertips  

Market segmentation and spending multipliers

Christian Proebsting

Journal of Monetary Economics, 2022, vol. 128, issue C, 1-19

Abstract: When workers are sluggish to change sectors and government demand is concentrated on few sectors, an increase in government spending has limited impact on production in other sectors and multipliers are higher. Compared to a one-sector model, a model calibrated to the 404 sectors of the U.S. economy raises multipliers by 0.5 when preferences feature no wealth effects on labor supply and by more if wealth effects are present. Relative price movements observed in response to spending shocks are consistent with the model’s mechanism. The model suggests that multipliers depend on the composition of stimulus packages.

Keywords: Fiscal multiplier; Mobility frictions; Input-output linkages (search for similar items in EconPapers)
JEL-codes: D57 E62 J60 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
Full text for ScienceDirect subscribers only

Related works:
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:

DOI: 10.1016/j.jmoneco.2022.02.008

Access Statistics for this article

Journal of Monetary Economics is currently edited by R. G. King and C. I. Plosser

More articles in Journal of Monetary Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().

Page updated 2024-03-31
Handle: RePEc:eee:moneco:v:128:y:2022:i:c:p:1-19