Imperfect competition and macroeconomics: a survey

Dixon, Huw David; Rankin, Neil

doi:10.1017/cbo9780511559648.004

Cited by 67 publications

(36 citation statements)

References 67 publications

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“…The scheme works via payroll taxes, and previously a balanced budget rule made them move counter-cyclically. The funds make the payroll taxes proportional (within limits) and thereby strengthen automatic stabilizers 26 (working via the supply side).…”

Section: Fiscal Rules -Automatic Stabilizersmentioning

confidence: 99%

Is there a Role for an Active Fiscal Stabilization Policy?

Andersen

2005

CESifo Economic Studies

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Abstract This paper discusses the need and scope for an active fiscal stabilization policy. It is argued that the effectiveness of fiscal policy as a short run stabilizer does not depend on the long run multipliers of (balanced budget) fiscal policies. To the extent that activity can be affected by aggregate demand in the short run, there is a case for a fiscal stabilization policy in terms of temporary variations in taxes or public consumption contingent on the state of the economy. The effectiveness of fiscal policy is supported by empirical evidence. However, an appropriate policy intervention depends both on the nature of the shock and the structure of the economy. There are thus fundamental information problems in pursuing discretionary fiscal policies on top of political economy concerns, and fiscal fine-tuning is not to be recommended. Automatic stabilizers do not to the same extent suffer from these problems, but their strength is not by design but the net result of other policy considerations. Hence, there is a need to consider the structure and size of automatic stabilizers. Terms of use: Documents inJEL Code: E6.

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Section: Fiscal Rules -Automatic Stabilizersmentioning

confidence: 99%

Is there a Role for an Active Fiscal Stabilization Policy?

Andersen

2005

CESifo Economic Studies

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“…where the superscripts w indicates world aggregates 10 . Dropping the index denoting agent j in order to ease exposition, the …rst order conditions 7 As the agents are in…nitely lived, government debt would be redundant.…”

Section: The Optimization Problemmentioning

confidence: 99%

“…The introduction of overlapping generations in the model, that would break down Ricardian equivalence, is left for future work. 8 This assumption eliminates the so called "elasticity e¤ect of the spending mix" (see Dixon and Rankin 1994, p. 189 and the references therein cited): changing the share of government demand on total demand has no e¤ects on the (constant) elasticity of total (private plus public) demand. 9 Equations (13) and (14) are derived integrating demand for good z across all agents, and exploiting the fact that the law of one price and the PPP imply that p(z)=P = p ¤ (z)=P ¤ for any good z.…”

Section: The Optimization Problemmentioning

confidence: 99%

Useful government spending, direct crowding-out and fiscal policy interdependence

Ganelli

2003

Journal of International Money and Finance

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This paper introduces perfect substitutability between private and public consumption in a dynamic, open economy with imperfect competition and nominal rigidities. This implies a direct crowding-out e¤ect that, generalising to the two-country case some well-known properties of a closed economy, tends to reduce consumption following both domestic and foreign expansions. A less expected result is that substitutability has a positive e¤ect on the short-run output spillover. We also show that, if we modify the model to allow for home bias in government spending, temporary …scal expansions display a "quasineutrality" property.JEL Classi…cation: E62 F41 F42 H4

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“…Furthermore they allow us to analyse the welfare effects of fiscal policy generated by mechanisms which are not captured by a perfect-competition model, such as the response to the policy of involuntary unemployment and profits (see Dixon and Rankin, 1994). There are studies which have explored how imperfect competition impact fiscal policy (see, for example, Dixon, 1987 andDixon andRankin, 1994, in a closed economy framework, and Dixon, 1992 in an open economy framework), however, to our knowledge, the impact of goods market imperfection on environmental tax reforms has not attracted enough attention yet. An exception is b) imperfect competition in the labour market, modelled as decentralised wage bargaining between unions and firms (we may obtain monopoly union and competitive wage setting as special cases when varying the power of the union); 4 c) externality caused by the use of a polluting good as a factor of production and as a commodity consumed by households.…”

Section: Introductionmentioning

confidence: 99%

Imperfect Competition, Labour Market Distortions, and the Double Dividend Hypothesis. Theory and Evidence from Italian Data

Marsiliani

Renström

2000

SSRN Journal

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The paper explores the hypothesis of a double dividend from environmental taxation i.e. whether shifting the burden of taxation away from labour toward the environment can boost employment and increase welfare. We present a general-equilibrium model where the economy is distorted by labour taxes, monopolistic product-market competition, and union-wage bargaining. We find that employment and welfare always increase when the revenue from an the introduction of a Pigouvian tax (imposed on firms and households) is fully recycled to cut the rate of the preexisting labour tax. Moreover, it turns out that the degree of the imperfections influences the magnitude of the effects of the reform. We also offer numerical results for the case in which the pollution tax is positive at the outset.

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Imperfect competition and macroeconomics: a survey

Cited by 67 publications

References 67 publications

Is there a Role for an Active Fiscal Stabilization Policy?

Is there a Role for an Active Fiscal Stabilization Policy?

Useful government spending, direct crowding-out and fiscal policy interdependence

Imperfect Competition, Labour Market Distortions, and the Double Dividend Hypothesis. Theory and Evidence from Italian Data

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