:5, and that a surprise tax increase has a contractionary effect on output, consumption and investment.Our results differ from … shock is not, that government spending shocks crowd out both residential and on-residential investment but do not reduce … consumption, that a deficit spending cut stimulates the economy for the first 4 quarters but has a low median multiplier of 0 …

recessions to keep consumption up.Thus, models with catching-up-with-the-Joneses utility functions call for traditional Keynesian … labor taxes can be very high, in the order of 50 percent.However, Campbell and Cochrane's nonlinear version of the … aspiration level in the catching-up-with-the-Joneses preferences has the additional implication that consumption bunching can be …