Budgetary policy and unemployment dynamics in an OLG model with collective bargaining

• 成果类型: Article
• 署名作者: Kaas, L; von Thadden, L
• 署名单位: University of Vienna
• 刊物名称: ECONOMIC JOURNAL
• ISSN/ISSBN: 0013-0133
• DOI: 10.1111/j.1468-0297.2004.00247.x
• 发表日期: 2004
• 页码: 867-889
• 关键词: persistence; GROWTH; MARKET; rules; tax

摘要

We consider a dynamic general equilibrium model with capital accumulation and collective wage bargaining and investigate how unemployment responds to structural shocks under two stylised budgetary policies. Under balanced budgets, tax adjustments lead to higher unemployment on impact but enable a quick recovery of employment. By contrast, unbalanced budgets mitigate unemployment effects on impact but dynamics are more persistent due to weaker capital accumulation and future fiscal consolidations. These results are consistent with empirical evidence on a positive cross-country relationship between government borrowing and unemployment persistence.