Fiscal Stimulus and Unemployment Dynamics

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Abstract

Focusing on both hiring and firing margins, this paper revisits effects of fiscal expansion on unemployment. We provide evidence that an increase in government spending increases the job finding rate and reduces the separation rate, lowering unemployment in the U.S. by using a structural VAR model. We then develop a DSGE model with search frictions where job separation is endogenously determined. Our model can capture the empirical pattern of responses of the job finding, separation, and unemployment rates to a government spending shock. We also demonstrate that model's predictions are in contrast with earlier studies that assume exogenous separation.

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Details 詳細情報について

  • CRID
    1571980077794084608
  • NII Article ID
    110009849467
  • NII Book ID
    AA12509645
  • Text Lang
    en
  • Data Source
    • CiNii Articles

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