increases in government spending have a strong negative effect on investment spending …

This paper evaluates the effects of fiscal policy on investment using a panel of OECD countries. In particular, we … investigate how different types of fiscal policy affect profits and , as a result, investment. We find a sizable negative effect … of public spending -- and in particular of its public wage component -- on business investment. This result is consistent …

consumption or investment. In this way, aggregate demand would be maintained by substituting public consumption for private …

worked as well as declines in real wages. The shocks are also associated with short lived rises in aggregate investment and … the qualitative effects of a fiscal shock. Once we allow for habit formation and investment adjustment costs, the model …

technology of private investment. Government policies that discourage saving might make the Schumpeterian vision of a shift from …

capital. We show that the competitive equilibrium is constrained inefficient, leading to too little risky investment. We also …