Replication data for: A Theory of Countercyclical Government Multiplier

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Project Description

Summary: I develop a New Keynesian model in which a type of government multiplier doubles when unemployment rises from 5 percent to 8 percent. This multiplier indicates the additional number of workers employed when one worker is hired in the public sector. Graphically, in equilibrium, an upward-sloping quasi-labor supply intersects a downward-sloping labor demand in a (employment, labor market tightness) plane. Increasing public employment stimulates labor demand, which increases tightness and therefore crowds out private employment. Critically, the quasi-labor supply is convex. Hence, when labor demand is depressed and unemployment is high, the increase in tightness and resulting crowding-out are small.

Scope of Project

Subject Terms: [Macroeconomic data, Matlab simulations, Dynare simulations]

JEL Classification:
      E12 General Aggregative Models: Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
      E24 Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
      E32 Business Fluctuations; Cycles
      E62 Fiscal Policy

Geographic Coverage: United States

Data Type(s): aggregate data

Methodology

Data Source: Bureau of Labor Statistics

Unit(s) of Observation: Year and month,

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Published Versions

V1 [2019-10-12]

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DDI 2.5

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