Fiscal Policy, Distortionary Taxation, and Direct Crowding Out under Monopolistic Competition

Ben Heijdra (), Jenny Ligthart and Frederick (Rick) van der Ploeg

Oxford Economic Papers, 1998, vol. 50, issue 1, 79-88

Abstract: A simple macroeconomic model with monopolistic competition on the goods market is developed which displays Keynesian features. The model is used to study the effects of a rise in public spending on national income. The model extends the literature in two directions. First, the authors assume that the government balances its budget by employing distortionary income taxation. Second, they allow for direct crowding out since public consumption enters private utility in a nonseparable fashion. With upward sloping labor supply, an increase in public spending depresses national income, more so in the long run than in the short run. Copyright 1998 by Royal Economic Society.

Date: 1998
References: Add references at CitEc
Citations: View citations in EconPapers (20)

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

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: https://EconPapers.repec.org/RePEc:oup:oxecpp:v:50:y:1998:i:1:p:79-88

Ordering information: This journal article can be ordered from
https://academic.oup.com/journals

Access Statistics for this article

Oxford Economic Papers is currently edited by James Forder and Francis J. Teal

More articles in Oxford Economic Papers from Oxford University Press Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK.
Bibliographic data for series maintained by Oxford University Press ().