The Multiplier in an Economy with Monopolistic Output Markets and Competitive Labour Markets

The purpose of this paper is to derive some new results and to link together these results with an existing literature. The focus of the paper is a macroeconomy characterized by monopolistic competition in output markets, but with a perfectly competitive labour market. We explore the implications of imperfect competition for the conduct and effectiveness of fiscal policy for output and employment in both the short run (with the number of firms fixed) and the long run (with free entry and exit of firms). 1 These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.