Fiscal Calculus and the Labor Market

Campolmi, Alessia; Faia, Ester; Winkler, Roland

doi:10.2202/1935-1690.2280

Cited by 15 publications

(15 citation statements)

References 32 publications

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“…From a quantitative point of view, results are similar to existing contributions such as Campolmi et al (2010) and Monacelli et al (2010): government spending expansions yield output multipliers well below one (around 0.5 for our calibration) and almost negligible negative effects on unemployment.…”

Section: Neoclassical Benchmark With Search-match Frictionssupporting

confidence: 82%

“…To examine the issue of unemployment there is an increasing practice in macroeconomics to introduce Mortensen-Pissarides search-matching (MPMF) frictions into otherwise standard NK models (Campolmi et al, 2010;Faia et al, 2010;Monacelli et al, 2010). These models allow to obtain unemployment equilibria, investigate the traditional unemployment-inflation trade-off, and evaluate the policy effects on the extensive margin of employment.…”

Section: Bymentioning

confidence: 99%

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A Fiscal Stimulus and Jobless Recovery

2013

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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-elasticityof-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.

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Section: Neoclassical Benchmark With Search-match Frictionssupporting

confidence: 82%

Section: Bymentioning

confidence: 99%

A Fiscal Stimulus and Jobless Recovery

2013

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“…We target the unemployment benefit z such that it amounts to 40 percent of the steady-state average labor income. 13 Following Campolmi et al (2011), we set the steady-state government spending to output ratio as 0.15 and the steady-state vacancy subsidy rate s v ¼ 0:01. We also assume that in the steady state the government spends exact amounts in both subsidies.…”

Section: Calibrationmentioning

confidence: 99%

Fiscal stimuli in the form of job creation subsidies

Kuo

Miyamoto

2015

Journal of Macroeconomics

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a b s t r a c tThis paper examines the effects of fiscal stimuli in the form of job creation subsidies in a DSGE model with search friction and endogenous job separation. We consider two types of job creation subsidies: a subsidy for the cost of posting vacancies and a hiring subsidy. This paper finds that the effects of job creation subsides on unemployment differ between models with and without endogenous job separation. While a positive job creation subsidy shock lowers unemployment in a model without endogenous job separation, it increases unemployment in a model with endogenous job separation. We also find that while qualitatively the effects of a vacancy cost subsidy on the economy are similar to those of a hiring subsidy, quantitatively they are different.

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“…Note that because there is no labor force participation or sectoral search-intensity decision, the household has no explicit choice over n s SB;t+1 and n L;t+1 . Instead, the household simply takes as given the labor supply side equations (4) and (8).…”

Section: Household Optimizationmentioning

confidence: 99%

Employment and Firm Heterogeneity, Capital Allocation, and Countercyclical Labor Market Policies

Epstein

Shapiro

2014

Int. finance discuss. pap.

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Many countries have large employment shares in micro and small …rms that have limited access to formal …nancing and therefore rely on input credit. Such countries are mainly emerging and developing economies, whose business cycle dynamics are increasingly important for the global economy in light of the dramatic rise in international linkages and spillovers that have occurred over the last several decades. Emerging and developing economies implemented a host of countercyclical labor market policies amid the global …nancial crisis, but data limitations on high-frequency labor and job ‡ows prevent a detailed empirical assessment of the e¤ectiveness of these policies. To address this problem, we develop a business cycle model with frictional labor markets that is novel in light of its consistency with the employment and …rm structure of emerging and developing economies. We use the model to assess the aggregate impact of key countercyclical labor market policies. We …nd that hiring subsidies and job intermediation services for large …rms are particularly e¤ective in aiding recoveries. Policies targeting smaller …rms yield limited aggregate bene…ts and may even be detrimental to the recovery process. The labor market structure shapes sectoral allocation and explains the economy's di¤erential response to policy.

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Fiscal Calculus and the Labor Market

Cited by 15 publications

References 32 publications

A Fiscal Stimulus and Jobless Recovery

A Fiscal Stimulus and Jobless Recovery

Fiscal stimuli in the form of job creation subsidies

Employment and Firm Heterogeneity, Capital Allocation, and Countercyclical Labor Market Policies

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