Chapter

Keynesian and Other Models of Safety Net Stimulus

Casey B. Mulligan

in The Redistribution Recession

Published in print November 2012 | ISBN: 9780199942213
Published online January 2013 | e-ISBN: 9780199980772 | DOI: http://dx.doi.org/10.1093/acprof:oso/9780199942213.003.0007
Keynesian and Other Models of Safety Net Stimulus

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This chapter presents a couple of “Keynesian” theories of the impact of redistribution, which claim that marginal tax rates have no effect on work hours during a recession, and that work hours are stimulated by any policy that puts resources in the hands of the poor and unemployed. The chapter explains how the fundamental differences between Keynesian approaches and mine are a matter of testable assumptions, and concludes with a simple econometric framework that embeds all of them. The relevant parts of that econometric model are estimated in the next chapter.

Keywords: slack labor market; liquidity trap; new keynesian models; zero lower bound; redistribution; economic stimulus

Chapter.  6841 words.  Illustrated.

Subjects: Public Economics

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