A Theory of Countercyclical Government Multiplier

• 成果类型: Article
• 署名作者: Michaillat, Pascal
• 署名单位: University of London; London School Economics & Political Science
• 刊物名称: AMERICAN ECONOMIC JOURNAL-MACROECONOMICS
• ISSN/ISSBN: 1945-7707
• DOI: 10.1257/mac.6.1.190
• 发表日期: 2014
• 页码: 190-217
• 关键词: labor-market; price adjustment; fiscal-policy; unemployment; EMPLOYMENT; search; fluctuations; EFFICIENCY; frictions; COSTS

摘要

I develop a New Keynesian model in which a type of government multiplier doubles when unemployment rises from 5 percent to 8 percent. This multiplier indicates the additional number of workers employed when one worker is hired in the public sector. Graphically, in equilibrium, an upward-sloping quasi-labor supply intersects a downward-sloping labor demand in a (employment, labor market tightness) plane. Increasing public employment stimulates labor demand, which increases tightness and therefore crowds out private employment. Critically, the quasi-labor supply is convex. Hence, when labor demand is depressed and unemployment is high, the increase in tightness and resulting crowding-out are small.