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(MPC) out of the rebates to construct a counterfactual path for nondurable consumption. The counterfactual path implies … that without the tax rebate nondurable consumption spending would have fallen dramatically in the late summer and fall of … consumption …
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We analyze whether government spending multipliers differ by the sign of the shock. Using aggregate historical U.S. data, we apply Ben Zeev's (2020) nonlinear diagnostic tests and find evidence of nonlinearities in the impulse response functions of both government spending and GDP. We then...
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