Hidden Bibliographic Details
| Other authors / contributors: | Levine, Paul, 1944-
Melina, Giovanni.
International Monetary Fund. Research Department.
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| ISBN: | 9781475537000
147553700X
9781475595895
1475595891
9781475595338
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| Notes: | Title from PDF title page (IMF Web site, viewed Jan. 30, 2013).
"Research Department."
"January 2013."
Includes bibliographical references.
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| Summary: | We analyse the effects of a government spending expansion in a DSGE model with Mortensen-Pissarides labour market frictions, deep habits in private and public consumption, investment adjustment costs, a constant-elasticity-of-substitution (CES) production function, and adjustments in employment both at the intensive as well as the extensive margin. The combination of deep habits and CES technology is crucial. The presence of deep habits magnifies the responses of macroeconomic variables to a fiscal stimulus, while an elasticity of substitution between capital and labour in the range of available estimates allows the model to produce a scenario compatible with the observed jobless recovery.
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