Fixed Costs, The Balanced-Budget Multiplier and Welfare
Published By: CDE on eSS | Published Date: September, 20 , 2008In a two-sector model, where one of the sectors is monopolistically competitive and subject to increasing returns to scale but without love for variety, the effects of a balanced budget fiscal expansion have been analysed. Such an expansion could increase the welfare of the representative individual, if elasticities of substitution in production and consumption are low. A reorganization of production takes place--increasing returns enabling a rise in real income. [Working Paper No. 171] URL: [http://www.cdedse.org/]
Author(s): Partha Sen | Posted on: Jun 20, 2011 | Views(972) | Download (140)