University of Surrey

Test tubes in the lab Research in the ATI Dance Research

A Fiscal Stimulus and Jobless Recovery

Cristiano Cantore\, , Paul Levine\, and Giovanni Melina\, (2013) A Fiscal Stimulus and Jobless Recovery Discussion Paper. International Monetary Fund\.

[img]
Preview
PDF
DP11-11.pdf
Available under License : See the attached licence file.

Download (4Mb)
[img]
Preview
PDF (licence)
SRI_deposit_agreement.pdf

Download (32Kb)

Abstract

We analyse the effects of a government spending expansion in a dynamic stochastic general equilibrium (DSGE) model with Mortensen-Pissarides labour market frictions, deep habits and a constant-elasticity-of-substitution (CES) production function. The combination of deep habits and CES technology is crucial. The presence of deep habits enables the model to deliver output and unemployment multipliers in the high range of recent empirical estimates, while an elasticity of substitution between capital and labour in the range of available estimates allows it to produce a scenario compatible with the observed jobless recovery. An accommodative monetary policy with respect to the output gap alongside sticky prices plays an important role for the stabilisation properties of the fiscal stimulus.

Item Type: Monograph (Discussion Paper)
Additional Information: Reproduced with permission of the authors.
Uncontrolled Keywords: Unemployment\, Fiscal policy\, Government expenditures\, Business cycles\, Economic models\, fiscal polic\
Related URLs:
Divisions: Faculty of Business, Economics and Law > Economics
Depositing User: Symplectic Elements
Date Deposited: 22 May 2012 18:57
Last Modified: 23 Sep 2013 19:22
URI: http://epubs.surrey.ac.uk/id/eprint/427917

Actions (login required)

View Item View Item

Downloads

Downloads per month over past year


Information about this web site

© The University of Surrey, Guildford, Surrey, GU2 7XH, United Kingdom.
+44 (0)1483 300800