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Simple Calculus of Resolving the Fiscal Policy Puzzle: The Role of Human Capital

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This paper investigates how much externality of human capital a la on-the-job training resolves the fiscal policy puzzle that is consistent with the empirical evidences which obtain the positive response of consumption and wage to increase of fiscal spending in general equilibrium model.
Cite this paper
Hiraga, K. (2014) Simple Calculus of Resolving the Fiscal Policy Puzzle: The Role of Human Capital. Theoretical Economics Letters, 4, 739-742. doi: 10.4236/tel.2014.49093. 
 

[1] Barro, R. and King, R. (1984) Time Separable Preferences and Intertemporal Substitution Models of the Business Cycle. Quarterly Journal of Economics, 99, 817-840. http://dx.doi.org/10.2307/1883127
[2] Baxter, M. and King, R. (1993) Fiscal Policy in General Equilibrium. American Economic Review, 83, 315-334.
[3] Fatás, A. and Mihov, I. (2001) The Effects of Fiscal Policy on Consumption and Employment: Theory and Evidence. INSEAD.
[4] Blanchard, O. and Perotti, R. (2002) An Empirical Characterization of the Dynamic Effects of Changes in Government Spending and Taxes on Output. Quarterly Journal of Economics, 117.
[5] Galí, J., López-Salido, J. and Vallés, J. (2007) Understanding the Government Spending on Consumption. Journal of the European Economic Association, 5, 227-270.
http://dx.doi.org/10.1162/JEEA.2007.5.1.227
[6] Becker, G. (2009) Human Capital: A Theoretical and Empirical Analysis, with Special Reference to Education. 3rd Edition, University of Chicago Press, Chicago.                                                    eww141124lx
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