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Title:Do government purchases affect unemployment? PDF Logo
Authors:Holden, Steinar
Sparrman, Victoria
Issue Date:2011
Series/Report no.:CESifo working paper: Fiscal Policy, Macroeconomics and Growth 3482
Abstract:We investigate empirically the effect of government purchases on unemployment in 20 OECD countries, for the period 1960-2007. Compared to earlier studies we use a data set with more variation in unemployment, and which allows for controlling for a host of factors that influence the effect of government purchases. We find that increased government purchases lead to lower unemployment; an increase equal to one percent of GDP reduces un-employment by 0.2 percentage point in the same year. The effect is greater in downturns than in booms, and also greater under a fixed exchange rate regime than under a floating regime.
Subjects:fiscal policy
unemployment
JEL:E62
H30
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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