Understanding the Effects of Government Spending on Consumption

Recent evidence suggests that consumption rises in response to an increase in government spending. That finding 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 consumers. We show how the interaction of the latter with sticky prices and deficit financing can account for the existing evidence on the effects of government spending

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Year of publication:	[2021]
Authors:	Galí, Jordi ; Lopez-Salido, David ; Vallés, Javier
Publisher:	[S.l.] : SSRN
Subject:	Öffentliche Ausgaben \| Public expenditure \| Privater Konsum \| Private consumption \| Theorie \| Theory \| Multiplikator \| Multiplier

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Extent:	1 Online-Ressource (54 p)
Series:	NBER Working Paper ; No. w11578
Type of publication:	Book / Working Paper
Language:	English
Notes:	Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments August 2005 erstellt
Source:	ECONIS - Online Catalogue of the ZBW

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