Kühn, Stefan; Muysken, Joan; Veen, Tom van - In: Metroeconomica 61 (2010) 4, pp. 621-639
Empirical evidence shows that government spending crowds in private consumption, a Keynesian phenomenon. The current, state of the art, New Keynesian models based on optimizing households and firms are not able to predict such a result. In this paper, we critically analyse fiscal policy in these...