unemployment. However, in many middle-income countries, a relatively large government coexists with persistently high unemployment … to long-run. Our findings do not provide any evidence that public employment reduces unemployment rate. The analysis in …

"This paper uses a model with a continuum of equilibrium unemployment rates to explore the effectiveness of fiscal … policy. The existence of multiple steady state unemployment rates is explained by the absence of markets for the inputs to a … high unemployment equilibrium, induced by the self-fulfilling beliefs of market participants about asset prices. Using this …