In this paper we present a fixprice model in which private and public consumption show some degree of substitution. We offer formulae for the Keynesian multiplier which depend on this degree of substitution. We also show that there is a Pigou effect and that, sometimes, this effect is larger...

We study the impact of investment on employment. In the short-run an increase in investment stimulates employment (this is the standard Keynesian multiplier). However increases of investment translate into increases in the capital stock. If labor and capital are substitutes (resp. complements),...

We study the impact of investment on employment. In the short-run an increase in investment stimulates employment (this is the standard Keynesian multiplier). However increases of investment translate into increases in the capital stock. If labor and capital are substitutes (resp. complements),...