Arbeitspapier
Optimal Government Spending and Unemployment
We study optimal government spending in a business cycle model with frictional unemployment. The Ramsey optimal policy is contrasted with a reference policy which would be first best in a frictionless economy. Results are: the Ramsey policy i) implies a higher steady state ratio of government spending to private consumption than the reference policy; ii) is procyclical under technology shocks and countercyclical under demand shocks (while the public spending ratio to private consumption is always countercyclical); iii) stabilizes employment, in some cases even at the cost of higher consumption volatility; iv) is qualitatively unaltered in a sticky price version with jointly optimal monetary and fiscal policy.
- Sprache
-
Englisch
- Erschienen in
-
Series: Tinbergen Institute Discussion Paper ; No. 08-024/2
- Klassifikation
-
Wirtschaft
Fiscal Policy
Business Fluctuations; Cycles
- Thema
-
Optimal fiscal policy
government spending
labor market frictions
unemployment
stabilization policy
Finanzpolitik
Öffentliche Ausgaben
Konjunktur
Friktionelle Arbeitslosigkeit
Wirtschaftliche Anpassung
Dynamisches Gleichgewicht
Wohlfahrtstheorie
Theorie
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Linnemann, Ludger
Schabert, Andreas
- Ereignis
-
Veröffentlichung
- (wer)
-
Tinbergen Institute
- (wo)
-
Amsterdam and Rotterdam
- (wann)
-
2008
- Handle
- Letzte Aktualisierung
-
10.03.2025, 11:42 MEZ
Datenpartner
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Objekttyp
- Arbeitspapier
Beteiligte
- Linnemann, Ludger
- Schabert, Andreas
- Tinbergen Institute
Entstanden
- 2008
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