European Integration and Employment: A New Role for Active Fiscal Policies?

Arbeitspapier

This paper theoretically investigates the impact of European integration on employment by developing a new-keynesian model where fiscal policy effectively reduces firms? market power. Stronger product market competition is shown to reduce the marginal ability of governments to improve employment through public consumption. As competition crowds out fiscal spending, the positive impact of markets integration on employment is weakened. Moreover, in a context where national goods? demand becomes ?global?, the marginal benefit for each national fiscal authority of increasing public consumption is lower than the marginal benefit for the community. This result stresses one source of coordination failure within the EMU.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 497

Classification and Topics

• Classification: Wirtschaft ; Labor Contracts ; International Policy Coordination and Transmission ; International Economic Order and Integration ; Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
• Subject: product market integration ; fiscal policy ; coordination ; equilibrium unemployment ; Finanzpolitik ; Internationale wirtschaftspolitische Koordination ; Europäische Wirtschafts- und Währungsunion ; Beschäftigungseffekt ; Effizienzlohn ; Unvollkommener Wettbewerb ; Ungleichgewichtstheorie ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Gatti, Donatella
• Event: Veröffentlichung
• (who): Institute for the Study of Labor (IZA)
• (where): Bonn
• (when): 2002

Further information

• Handle: http://hdl.handle.net/10419/21443
• Last update: 10.03.2025, 11:41 AM CET