Existing studies on the fiscal multiplier under imperfect competition assume a symmetric market structure with identical firms. This paper examines the fiscal policy implications of introducing a multisectoral economy where a composite commodity is o¤ered in many varieties within a market of monopolistic competition while a homogeneous good is produced in a perfectly competitive enviroment. Within the context of this mixed industrial structure we show that the sign and the size of the short run multiplier crucially depends on the composition of public expenditure chosen by the government.

Composition of Public Expenditure and Short Run Fiscal Multiplier

CENSOLO, Roberto;COLOMBO, Caterina
2006

Abstract

Existing studies on the fiscal multiplier under imperfect competition assume a symmetric market structure with identical firms. This paper examines the fiscal policy implications of introducing a multisectoral economy where a composite commodity is o¤ered in many varieties within a market of monopolistic competition while a homogeneous good is produced in a perfectly competitive enviroment. Within the context of this mixed industrial structure we show that the sign and the size of the short run multiplier crucially depends on the composition of public expenditure chosen by the government.
public consumption; demand composition; fiscal policy; multiplier
File in questo prodotto:
Non ci sono file associati a questo prodotto.

I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.

Utilizza questo identificativo per citare o creare un link a questo documento: http://hdl.handle.net/11392/517528
 Attenzione

Attenzione! I dati visualizzati non sono stati sottoposti a validazione da parte dell'ateneo

Citazioni
  • ???jsp.display-item.citation.pmc??? ND
  • Scopus ND
  • ???jsp.display-item.citation.isi??? ND
social impact