Algebraic calculation of the fiscal multiplier ignores the concept of velocity of money. Here, we incorporate the concept of velocity of money in the algebraic derivation of the fiscal multiplier which results into a slightly different representation. Then, we empirically calculate the values of...

Should the generosity of unemployment benefits and the progressivity of income taxes depend on the presence of business cycles? This paper proposes a tractable model where there is a role for social insurance against uninsurable shocks to income and unemployment, as well as inefficient business...

Should the generosity of unemployment benefits and the progressivity of income taxes depend on the presence of business cycles? This paper proposes a tractable model where there is a role for social insurance against uninsurable shocks to income and unemployment, as well as inefficient business...

The Great Recession seems to be a natural experiment for economic analysis, in that it has shown the inadequacy of the predominant theoretical framework - the New Neoclassical Synthesis (NNS) - grounded on the DSGE model. In this paper, we present a critical discussion of the theoretical,...