Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
5055159 | Economic Modelling | 2010 | 10 Pages |
Abstract
This paper incorporates a distinction between spending for government employment and spending for non-wage government consumption in a 'new open economy macroeconomics' model. Our results show that a permanent reduction in public employment in one country increases relative private consumption and appreciates the domestic exchange rate. We also compare announced reductions in domestic government employment and consumption, showing that these two policies have the same qualitative effects. When the reduction in public employment is used to finance increased government non-wage spending, the analytical results of the model are ambiguous, but a numerical analysis shows that relative consumption increases for a reasonable parameterization.
Related Topics
Social Sciences and Humanities
Economics, Econometrics and Finance
Economics and Econometrics
Authors
Giovanni Ganelli,