Should Fiscal Policy Be Di.erent in a Non-Competitive Framework?

Arantza Gorostiaga ()
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Arantza Gorostiaga: Universidad del País Vasco, http://www.ehu.es/agorostiaga/

No E2002/11, Economic Working Papers at Centro de Estudios Andaluces from Centro de Estudios Andaluces

Abstract: This paper studies if imperfections in the labor market justify a diferent fiscal policy. We present a dynamic general equilibrium model with a Ramsey planner deciding about public spending, labor taxes and debt. Two diferent labor market setups are considered. First we assume a competitive labor market and then we introduce a union with monopoly power. Both models reach the same conclusion as regards the cyclical properties of the optimal policy: it is not optimal to implement a countercyclical fiscal policy. We also find that government spending should be larger under perfect competition. These main results arise both under complete and incomplete markets for the debt.

Keywords: Ramsey problem; labor market imperfections; incomplete markets (search for similar items in EconPapers)
JEL-codes: C6 E62 H21 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2002
New Economics Papers: this item is included in nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Related works:
Journal Article: Should fiscal policy be different in a non-competitive framework? (2003)
Working Paper: Should Fiscal Policy be Different in a Non-Competitive Framework? (1999)
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Persistent link: https://EconPapers.repec.org/RePEc:cea:doctra:e2002_11

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