Fiscal Stimulus and Labor Market Dynamics in Japan
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Abstract
The paper studies effects of fiscal expansion on the Japanese labor market. First, using a structural VAR model, we find that the unemployment rate falls and employment rises following an increase in government spending. We also find that fiscal expansion affects flows in and out of unemployment. While an increase in government spending increases the job-finding rate, it reduces the separation rate. We then incorporate search and matching frictions into a standard dynamic general equilibrium model, and study whether the model can explain what we observed in data. While the model fails to predict the exact size of the impact of the government spending shock on the Japanese labor market variables, it can consistently capture the empirical pattern of responses of labor market variables to the shock.
Journal
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- Economics & Management Series
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Economics & Management Series 2012-11-01
International University of Japan
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Details 詳細情報について
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- CRID
- 1050001337611562752
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- NII Article ID
- 110009487318
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- NII Book ID
- AA12509645
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- Text Lang
- en
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- Article Type
- departmental bulletin paper
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- Data Source
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- IRDB
- CiNii Articles