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612-822-4611
Understanding the Effects of Government Spending on Consumption

Understanding the Effects of Government Spending on Consumption

Paperback

Business General

ISBN10: 1505237203
ISBN13: 9781505237207
Publisher: Createspace
Published: Nov 29 2014
Pages: 44
Weight: 0.28
Height: 0.09 Width: 8.50 Depth: 11.00
Language: English
Recent evidence on the effect of government spending shocks on consumption cannot be easily reconciled with existing optimizing business cycle models. We extend the standard New Keynesian model to allow for the presence of rule-of-thumb (non- Ricardian) consumers. We show how the interaction of the latter with sticky prices and deficit financing can account for the existing evidence on the effects of government spending.

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Business General