Article Dans Une Revue (Article De Synthèse) IMF Economic Review Année : 2025

Fiscal Management of Aggregate Demand: The Effectiveness of Labor Tax Credits

Résumé

We use a quantitative heterogeneous agent model with nominal rigidities and unemployment risk to analyze the effectiveness of several fiscal policies in stabilizing a demand-driven recession. The model delivers empirically realistic distributions of marginal propensities to consume (mpc) and labor participation elasticities (lpe) and matches the cross-sectional incidence of unemployment risk over the business cycle. We consider three fiscal stabilization packages: (i) a transfer to all low-income households, (ii) an increase in unemployment benefits to unemployed households, and (iii) an increase in labor tax credits to low-income working households. The labor tax credit is the most effective package to attenuate the recession, as it targets both high-mpc and high-lpe households and thus jointly stimulates labor and consumption. This result holds despite the recession resulting in higher unemployment risk.

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vendredi 11 septembre 2026
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Dates et versions

hal-05446602 , version 1 (07-01-2026)

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Axelle Ferriere, Gaston Navarro. Fiscal Management of Aggregate Demand: The Effectiveness of Labor Tax Credits. IMF Economic Review, 2025, International Monetary Fund Economic Review, 73 (3), pp.733-778. ⟨10.1057/s41308-025-00287-w⟩. ⟨hal-05446602⟩
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