Do Government Purchases Affect Unemployment?

Steinar Holden and Victoria Sparrman ()
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Victoria Sparrman: Dept. of Economics, University of Oslo, Postal: Department of Economics, University of Oslo, P.O Box 1095 Blindern, N-0317 Oslo, Norway

No 17/2011, Memorandum from Oslo University, Department of Economics

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 unemployment 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)
Pages: 41 pages
Date: 2011-05-23
New Economics Papers: this item is included in nep-cba, nep-lab and nep-mac
References: View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Related works:
Journal Article: Do Government Purchases Affect Unemployment? (2018)
Working Paper: Do Government Purchases Affect Unemployment? (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:osloec:2011_017

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