Angeletos, George-Marios; Panousi, Vasia - In: Journal of Monetary Economics 56 (2009) 2, pp. 137-153
We revisit the macroeconomic effects of government consumption in the neoclassical growth model when agents face uninsured idiosyncratic investment risk. Under complete markets, a permanent increase in government consumption has no long-run effect on interest rates and capital intensity, while...