Useful Government Spending, Direct Crowding Out and Fiscal Policy Interdependence.

This paper introduces perfect substitutability between private and public consumption in a dynamic, open economy with imperfect competition and nominal rigidities. This implies a direct crowding-out effect that, generalizing to the two-country case some well-known properties of a closed economy, tends to reduce consumption following both domestic and foreign expansions. A less expected result is that sub-stitutability has a positive effect on the short-run output spillover.

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Year of publication:	2000
Authors:	Ganelli, G.
Institutions:	Department of Economics, University of Warwick
Subject:	COMPETITION \| PRICES \| FISCAL POLICY

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Series:	The Warwick Economics Research Paper Series (TWERPS).
Type of publication:	Book / Working Paper
Language:	English
Notes:	37 pages
Classification:	E62 - Fiscal Policy; Public Expenditures, Investment, and Finance; Taxation ; F41 - Open Economy Macroeconomics ; F42 - International Policy Coordination and Transmission ; H4 - Publicly Provided Goods
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005178307