Format:
1 Online-Ressource (circa 53 Seiten)
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ISBN:
9781498316835
Series Statement:
IMF working paper WP/19, 125
Content:
A New Keynesian model with government production, public compensation, and unemployment is fit to U.S. data to study the macroeconomic and fiscal effects of public wage reductions. We find that accounting for the type of government spending is crucial for its macroeconomic implications. Although reductions in public wages and government purchases of goods have similar effects on total output and the fiscal balance, the former can raise private output slightly, in contrast to the substantial contractionary effects of the latter. In addition, the baseline estimation finds that exogenous public wage reductions decrease private wages. Model counterfactuals show that sufficiently rigid nominal private wages can reverse the response of private wages, as the rigidity dampens the labor reallocation effect from the public to private sector that exerts downward pressure on private wages
Additional Edition:
Erscheint auch als Druck-Ausgabe Chang, Juin-Jen Fiscal Consolidation and Public Wages Washington, D.C. : International Monetary Fund, 2019 ISBN 9781498316835
Language:
English
Keywords:
Graue Literatur
DOI:
10.5089/9781498316835.001
URL:
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