This setting lets you change the way you view articles. You can choose to have articles open in a dialog window, a new tab, or directly in the same window.
Open in Dialog
Open in New Tab
Open in same window

American Economic Journal: Macroeconomics: Vol. 6 No. 1 (January 2014)

Expand

Quick Tools:

Print Article Summary
Export Citation
Sign up for Email Alerts Follow us on Twitter Subscription Information
(Institutional Administrator Access)

Explore:

AEJ: Macro - All Issues

AEJ: Macro Forthcoming Articles

A Theory of Countercyclical Government Multiplier

Article Citation

Michaillat, Pascal. 2014. "A Theory of Countercyclical Government Multiplier." American Economic Journal: Macroeconomics, 6(1): 190-217.

DOI: 10.1257/mac.6.1.190

Abstract

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.

Article Full-Text Access

Full-text Article

Additional Materials

Authors

Michaillat, Pascal (London School of Economics and Political Science)

JEL Classifications

E12: General Aggregative Models: Keynes; Keynesian; Post-Keynesian
E24: Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital
E32: Business Fluctuations; Cycles
E62: Fiscal Policy

Comments

View Comments on This Article (0) | Login to post a comment


American Economic Journal: Macroeconomics


Quick Tools:

Sign up for Email Alerts

Follow us on Twitter

Subscription Information
(Institutional Administrator Access)

Explore:

AEJ: Macro - All Issues

AEJ: Macro - Forthcoming Articles

Virtual Field Journals


AEA Member Login:


AEAweb | AEA Journals | Contact Us