EconPapers    
Economics at your fingertips  
 

Fiscal Stimulus in an Endogenous Job Separation Model

Ryuta Kato () and Hiroaki Miyamoto

No EMS_2013_02, Working Papers from Research Institute, International University of Japan

Abstract: This paper re-visits effects of fiscal expansion on employment and unemployment by focusing on both hiring and firing margins. We develop a dynamic stochastic general equilibrium model with labor search frictions in which job separation is endogenously determined. We study effects of fiscal stimuli in the form of government spending and hiring subsidies. The prediction of our model is in contrast with earlier studies that assume exogenous job separation. First, our model generates a larger size of the impact of a government spending shock on labor market variables than the model without endogenous separation. Second, while an increase in hiring subsidies increases employment and reduces unemployment in the model without endogenous separation, it reduces employment and increases unemployment in our model.

Keywords: Fiscal Policy; Unemployment; Labor market; Search and matching; Endogenous separation (search for similar items in EconPapers)
JEL-codes: E24 E62 J64 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2013-01
New Economics Papers: this item is included in nep-dge and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3) Track citations by RSS feed

Downloads: (external link)
https://www.iuj.ac.jp/workingpapers/index.cfm?File=EMS_2013_02.pdf First version, 2013 (application/pdf)

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:iuj:wpaper:ems_2013_02

Access Statistics for this paper

More papers in Working Papers from Research Institute, International University of Japan 777 Kokusai-cho, Minami Uonuma0-shi, Niigata 949-7277 JAPAN. Contact information at EDIRC.
Bibliographic data for series maintained by Kazumi Imai, Office of Academic Affairs ().

 
Page updated 2020-07-29
Handle: RePEc:iuj:wpaper:ems_2013_02