A Note on Taxation, Imperfect Competition and the Balanced Budget Multiplier *

A Simple Model of Keynesian Unemployment

“…The above result is similar to that of Dixon (1987), Mankiw (1988), Startz (1989), Molana and Moutos (1992) and Bénassy (1995); however, while their multiplier decreases with the wage share in income, the multiplier in this study increases along with the wage share. This is because ∂c/∂q > 0.…”

Intertemporal Preferences, Imperfect Competition and Effective Fiscal Intervention

“…Some of the previous studies, for instance Dixon (1987), Mankiw (1988) and Startz (1989), use (1a) or (1b) and show that a tax-¢nanced ¢scal expansion raises output. Molana and Moutos (1992b) illustrate that this result is not neutral to the choice of taxation method and point out that the choice should be justi¢ed. In fact, this issue turns out to be rather crucial for our present purpose because, unlike in the above studies where tax revenue is the only source of ¢nancing a public de¢cit, in this paper we also allow for the possibility of using borrowing.…”

Welfare‐maximising Pricing in a Macroeconomic Model With Imperfect Competition and Consumption Externalities

“…In line with Dixon (1987) and Molana and Moutos (1992), the household derives utility from final good consumption C and leisure l. Moreover, in line with Galí (1994), Fisher and Hof (2000), Dupor and Liu (2003) and Liu and Turnovsky (2005), we assume that the utility of the 1 Dixon (1987) and Mankiw (1988) explicitly specify the representative household's utility function that can be taken to reflect the welfare level of the economy. Benhabib and Farmer (1994) and Farmer and Guo (1994) specify that the production side of the economy includes two sectors: a perfectly competitive final good sector and a monopolistically competitive intermediate goods sector.…”