This paper employs tests for Granger-Sims causality and a four-variable vector-autoregression (VAR) to examine whether real government spending and real net taxes have any systematic effect on output purchased by the private sector. The paper finds no evidence of causality from government...

Increases in defense spending – the largest portion of discretionary government spending in the U.S. – are negatively associated with private sector firm innovation measured using various patent-based proxies. A central finding in our study is that the extent to which government spending...

The renewed interest in the role of the private sector as a powerhouse for enhancing economic development provides the impetus for this study. Specifically, the study investigates the effects of public spending on private sector investment amidst rising fiscal deficit, with the view of...

Recent macro developments in the euro area have highlighted the interactions between fiscal policy, sovereign debt, and financial fragility. We take a structural macroeconomic model with frictions in the financial intermediation process, in line with recent research, but introduce asset choice...