Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/209924
Authors: 
Furlanetto, Francesco
Year of Publication: 
2009
Series/Report no.: 
Working Paper 2009/08
Abstract: 
In this paper we study the impact of an expansion in public spending in a credit constrained economy with sticky wages. The flexible wage version of the model implies strong expansionary effects on output and consumption but also a counterfactual increase in real wages. The introduction of sticky wages, besides being a realistic addition, solves these problems and preserves the expansionary effects on output and consumption. Moreover, once we introduce segmentation in the labor market, sticky wages are even essential to obtain expansionary effects.
Subjects: 
sticky wages
rule-of-thumb consumers
fiscal shocks
financial frictions
JEL: 
E32
E62
Persistent Identifier of the first edition: 
ISBN: 
978-82-7553-502-1
Creative Commons License: 
https://creativecommons.org/licenses/by-nc-nd/4.0/deed.no
Document Type: 
Working Paper
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