TY  - RPRT
        AU  - Gatti, Donatella
        TI  - European Integration and Employment: A New Role for Active Fiscal Policies?
        PY  - 2002/May/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 497
        UR  - https://www.iza.org/publications/dp497
        AB  - This paper theoretically investigates the impact of European integration on employment by
developing a new-keynesian model where fiscal policy effectively reduces firms’ market
power. Stronger product market competition is shown to reduce the marginal ability of
governments to improve employment through public consumption. As competition crowds out
fiscal spending, the positive impact of markets integration on employment is weakened.
Moreover, in a context where national goods’ demand becomes “global”, the marginal benefit
for each national fiscal authority of increasing public consumption is lower than the marginal
benefit for the community. This result stresses one source of coordination failure within the
EMU.
        KW  - equilibrium unemployment
KW  - coordination
KW  - fiscal policy
KW  - product market integration
        ER  -