هزینه های مطلوب دولت با اصطکاک های بازار کار

We study optimal government spending in a business cycle model with labor income taxes and unemployment due to hiring costs. Labor market frictions raise the optimal steady state ratio of government spending to private consumption. The labor tax rate is higher since profits are taxed that arise from employed workers which save hirings costs. For calibrated examples, the quantitative effect of labor market frictions on optimal fiscal policy is small. In the short run, optimal policy involves a strongly procyclical reaction of the tax rate to technology and preference shocks, while the ratio of public to private spending is close to flat. This ratio is, however, markedly countercyclical if taxes are constrained to be constant over the cycle.

This paper studies optimal government spending and tax policies in an economy with frictional unemployment. We assume that the government produces public goods that yield utility to private households, and finances its spending by means of a proportional tax on labor income. Unemployment exists because hiring is costly (as in Blanchard and Gali, 2010), such that firms willing to expand their employment have to expend resources that depend on the aggregate tightness of the labor market. Wages are determined through Nash bargaining. Due to the existence of hiring costs, there are generally non-zero profits even though firms are competitive and production takes place under constant returns to scale. The government solves a Ramsey problem by choosing sequences of labor tax rates and spending levels that lead to the equilibrium allocation yielding the highest level of welfare.

In this paper, we have analyzed the optimal conduct of government spending and labor income tax policy in a model with frictional unemployment. We use a setting where in the absence of labor market frictions the optimal Ramsey policy would call for choosing steady state government spending so as to equalize their marginal utility to the one of private consumption, such that the ratio of public to private consumption would be determined by the utility function parameter that gives the relative weight of useful public spending in utility. With labor market frictions, the optimal policy entails a steady state where government spending is higher relatively to private consumption. The quantitative size of this departure is low, however, in a calibrated quantitative model version.