Motivated by the high public employment, and the public wage premia observed in Europe, a Real-Business-Cycle model, calibrated to German data (1970-2007), is set up with a richer government spending side, and an endogenous private-public sector labor choice. To illustrate the effects of fiscal policy, two regimes are compared and contrasted to one another exogenous vs. optimal (Ramsey) policy ...

HOW BIG A ROLE THE GOVERNMENT SHOULD play in the economy is always a central issue in political debates. But measuring the size of government is not simple. People often use shorthand measures, such as the ratio of spending to gross domestic product (GDP) or of tax revenues to GDP. But those measures leave out important aspects of government action. For example, they do not capture the ways gov...

It has been shown that under perfect competition and constant returns-to-scale, a onesector real business cycle model may exhibit indeterminacy and sunspots when income tax rates are determined by a balanced-budget rule with a pre-set level of government expenditures. This paper shows that indeterminacy disappears if the government finances endogenous public spending and transfers with fixed in...

This paper explores the effects of government consumption spending in a small open economy both under flexible and fixed exchange rate regimes. Varying price elasticity and the variety effect due to firm entry, are introduced to match the empirical evidences on the small open economy. The main mechanism is that firm entry leads to a higher price elasticity (hence variable markup), and increasin...

The study of government expenditure is essential for economists and policymakers. This aims to analyze the impact various spending, mainly on education, health, military, effect welfare Asian Countries. was conducted in 20 countries constructed panel data from 2013–2017 analyzed using fixed general least square (FEGLS) method. results show that, spending education had a positive significant Cou...

This study probed the macroeconomic effects of budget deficit in Nigeria. Specifically, it seeks to probe effect on private investment and public Nigeria by adopting ADF unit root test ARDL model, Granger Causality short-run diagnostics stability using annual time series data covering 37 years from 1981 2019. The variables employed include – Growth rate real gross domestic product, (Gross Fixed...