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Do Government Purchases Affect Unemployment?

Steinar Holden () and Victoria Sparrman

No 3482, CESifo Working Paper Series from CESifo

Abstract: We investigate empirically the effect of government purchases on unemployment in 20 OECD countries, for the period 1960-2007. Compared to earlier studies we use a data set with more variation in unemployment, and which allows for controlling for a host of factors that influence the effect of government purchases. We find that increased government purchases lead to lower unemployment; an increase equal to one percent of GDP reduces un-employment by 0.2 percentage point in the same year. The effect is greater in downturns than in booms, and also greater under a fixed exchange rate regime than under a floating regime.

Keywords: fiscal policy; unemployment (search for similar items in EconPapers)
JEL-codes: E62 H30 (search for similar items in EconPapers)
Date: 2011
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Related works:
Journal Article: Do Government Purchases Affect Unemployment? (2018) Downloads
Working Paper: Do Government Purchases Affect Unemployment? (2011) Downloads
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