Bermperoglou, D., Pappa, E. and Vella, E. orcid.org/0000-0001-7610-0903 (2017) The Government Wage Bill and Private Activity. Journal of Economic Dynamics and Control, 79. pp. 21-47. ISSN 0165-1889
Abstract
We estimate the macroeconomic effects of public wage expenditures in U.S. data by identifying shocks to public employment and public wages using sign restrictions. We find that public employment shocks are mildly expansionary at the federal level and strongly expansionary at the state and local level by crowding in private consumption and increasing labor force participation and private sector employment. Similarly, state and local government wage shocks lead to increases in consumption and output, while shocks to federal government wages induce significant contractionary effects. In a stylized DSGE model we show that the degree of complementarity between public and private goods in the consumption bundle is key for explaining the observed heterogeneity.
Metadata
Item Type: | Article |
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Authors/Creators: |
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Copyright, Publisher and Additional Information: | © 2017 Elsevier. This is an author produced version of a paper subsequently published in the Journal of Economic Dynamics and Control. Uploaded in accordance with the publisher's self-archiving policy. Article available under the terms of the CC-BY-NC-ND licence (https://creativecommons.org/licenses/by-nc-nd/4.0/) |
Keywords: | government wage bill; fiscal multipliers; VARs; sign restrictions; DSGE model; search and matching frictions |
Dates: |
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Institution: | The University of Sheffield |
Academic Units: | The University of Sheffield > Faculty of Social Sciences (Sheffield) > Department of Economics (Sheffield) |
Depositing User: | Symplectic Sheffield |
Date Deposited: | 31 Mar 2017 13:16 |
Last Modified: | 01 Apr 2019 00:38 |
Published Version: | http://dx.doi.org/10.1016/j.jedc.2017.03.006 |
Status: | Published |
Publisher: | Elsevier |
Refereed: | Yes |
Identification Number: | 10.1016/j.jedc.2017.03.006 |
Open Archives Initiative ID (OAI ID): | oai:eprints.whiterose.ac.uk:114299 |