Fiscal stimulus and labor market flexibility
- This paper investigates whether a fiscal stimulus implies a different impact for flexible and rigid labour markets. The analysis is done for 11 advanced OECD economies. Using quarterly data from 1999 to 2013, I estimate a panel threshold structural VAR model in which regime switches are determined by OECD’s employment protection legislation index. My empirical results indicate significant differences between rigid and flexible labour markets regarding the impact of the fiscal stimulus on output and unemployment. While the impulse response of real GDP to a government spending shock is positive and more effective in flexible labour markets, it has less impact in the rigid ones. Moreover, it is found that a fiscal stimulus leads to higher overall unemployment in highly regulated countries.
| Author: | Pinar Topal |
|---|---|
| URN: | urn:nbn:de:hebis:30:3-371279 |
| URL: | http://ssrn.com/abstract=2573758 |
| Parent Title (English): | SAFE working paper series ; No. 90 |
| Series (Serial Number): | SAFE working paper (90) |
| Publisher: | SAFE |
| Place of publication: | Frankfurt am Main |
| Document Type: | Working Paper |
| Language: | English |
| Date of Publication (online): | 2015/03/06 |
| Date of first Publication: | 2015/03/06 |
| Publishing Institution: | Universitätsbibliothek Johann Christian Senckenberg |
| Release Date: | 2015/03/10 |
| Tag: | fiscal policy; impulse analysis; labour economics; labour market policies; non-linear VAR; panel VAR; threshold vector auto-regressive models |
| Issue: | March 3, 2015 |
| Page Number: | 47 |
| HeBIS-PPN: | 357671481 |
| Institutes: | Wirtschaftswissenschaften / Wirtschaftswissenschaften |
| Wissenschaftliche Zentren und koordinierte Programme / House of Finance (HoF) | |
| Wissenschaftliche Zentren und koordinierte Programme / Center for Financial Studies (CFS) | |
| Wissenschaftliche Zentren und koordinierte Programme / Sustainable Architecture for Finance in Europe (SAFE) | |
| Dewey Decimal Classification: | 3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft |
| Sammlungen: | Universitätspublikationen |
| Licence (German): |  Deutsches Urheberrecht |
