Fiscal Multipliers in a Two-Sector Search and Matching Model

Angelopoulos, Konstantinos and Jiang, Wei and Malley, James (2015) Fiscal Multipliers in a Two-Sector Search and Matching Model. Working paper. CESifo (The full text of this publication is not currently available from this repository. You may be able to access a copy if URLs are provided)

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Official URL
https://ssrn.com/abstract=2562253

Abstract

This paper evaluates the effects of policy interventions on sectoral labour markets and the aggregate economy in a business cycle model with search and matching frictions. We extend the canonical model by including capital-skill complementarity in production, labour markets with skilled and unskilled workers and on-the-job-learning (OJL) within and across skill types. We first find that, the model does a good job at matching the cyclical properties of sectoral employment and the wage-skill premium. We next find that vacancy subsidies for skilled and unskilled jobs lead to output multipliers which are greater than unity with OJL and less than unity without OJL. In contrast, the positive output effects from cutting skilled and unskilled income taxes are close to zero. Finally, we find that the sectoral and aggregate effects of vacancy subsidies do not depend on whether they are financed via public debt or distorting taxes. JEL-Code: E240, E320, J630, J640, J680 CESifo Working Paper No. 5197

Item Type: Monograph (Working paper)
Uncontrolled keywords: fiscal multipliers, sectoral labour markets, search and matching
Divisions: Faculties > Social Sciences > School of Economics
Depositing User: Wei Jiang
Date Deposited: 23 Jan 2017 11:13 UTC
Last Modified: 05 Dec 2017 11:55 UTC
Resource URI: https://kar.kent.ac.uk/id/eprint/60011 (The current URI for this page, for reference purposes)
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