The paper discusses the short-run relation between public and private employment. Empirical evidence is presented suggesting that in aggregate US time series, increases in government employment appear to generate temporarily positive responses of private employment and real output. Unlike in the...

It is well known that equilibrium indeterminacy can arise in a neoclassical growth model when the government continuously balances its budget through adjustments of the income tax rate. This paper demonstrates that indeterminacy is unlikely to occur if preferences are not restricted to be...

This paper studies the role of the markup of price over marginal cost for the transmission of fiscal policy shocks. We construct time series of markups allowing for fluctuations in capacity utilization and total factor productivity and use an aggregate production function that is more general...