GDP accounts are customarily compiled in several alternative ways, each aggregating transactions in different ways, but all (at least in theory) adding to the same total. Two of the most common aggregations are that focused on expenditures (based on the standard national income accounting...

This paper contrasts the effects of balanced-budget reductions in government consumption on private consumption in the permanent income model and a model allowing for precautionary savings. We compare impulse responses of private consumption to temporary and permanent shocks to government...