Understanding the Effects of Government Spending on Consumption
Pompeu Fabra University · Federal Reserve Board of Governors · +1 more institution
Indexed incrossref
Abstract
Recent evidence on the effect of government spending shocks on consumption cannot be easily reconciled with existing optimizing business cycle models. We extend the standard New Keynesian model to allow for the presence of rule-of-thumb (non-Ricardian) consumers. We show how the interaction of thelatterwithstickypricesanddeficit financing can account for the existing evidence on the effects of government spending. JEL Classification: E32, E62
Citation impact
1,931
total citations
- FWCI
- 138.94
- Percentile
- 100%
- References
- 69
Citations per year
Authors
3Topics & keywords
Topics
Keywords
- Economics
- Government spending
- Rule of thumb
- Consumption (sociology)
- Business cycle
- Consumer spending
- New Keynesian economics
- Government (linguistics)
UN Sustainable Development Goals
- Decent work and economic growth
No related works found for this paper.