Journal Article
Fiscal Stimulus and Labor Market Policies in Europe
Journal of Economic Dynamics and Control
Authors
Publication Date
JEL Classification
E62
H30
J20
H20
Key Words
Several contributions have recently assessed the size of fiscal multipliers both in RBC models
and in New Keynesian models. This paper computes fiscal multipliers within a labor selection
model with turnover costs and Nash bargained wages. We find that demand stimuli yield small
multipliers, as they have little impact on hiring and firing decisions. By contrast, hiring subsidies, and short-time work (German "Kurzarbeit") deliver large multipliers, as they
stimulate job creation and employment.
