Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/173153 
Authors: 
Year of Publication: 
2017
Series/Report no.: 
IWQW Discussion Papers No. 10/2014
Version Description: 
Updated version: December 2017
Publisher: 
Friedrich-Alexander-Universität Erlangen-Nürnberg, Institut für Wirtschaftspolitik und Quantitative Wirtschaftsforschung (IWQW), Nürnberg
Abstract: 
This paper shows how fiscal policy affects unemployment in a New Keynesian model with search and matching frictions and distortionary taxation. The model is estimated using US data that includes labor market flows and distinct fiscal instruments. Several findings stand out. First, unemployment mult ipliers for spending and consumption tax cuts are substantial, even though output multipliers turn out to be less than one. Second, multipliers for labor tax cuts ar e small. Third, fiscal rules enhance the positive effects of discretionary fiscal policy. However, these expansionary effects on the multipliers are modest compare d to earlier studies.
Subjects: 
Fiscal policy
Fiscal rules
Unemployment
Search and matching
JEL: 
E62
J20
C11
Document Type: 
Working Paper

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