Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/83568
Authors: 
Campolmi, Alessia
Faia, Ester
Winkler, Roland
Year of Publication: 
2011
Series/Report no.: 
MNB Working Papers 2011/5
Abstract: 
During the Great Recession following the recent financial crisis large fiscal stimuli were implemented to counteract labor market sclerosis. We explore the effectiveness of various fiscal packages in a matching model featuring inefficient unemployment and a rich fiscal sector employing distortionary taxation and government debt. Results show that only stimuli directed toward the labor market, such as hiring subsidies, deliver large multipliers. Those policies can, indeed, abate the congestion externality, pervasive in the labor market. Various robustness checks confirm the results. The results obtained in the calibrated model are also confirmed through Bayesian estimation.
Subjects: 
fiscal calculus
taxation
matching frictions
bayesian estimation
JEL: 
E62
E63
E24
Document Type: 
Working Paper

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