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Center for Financial Studies (CFS), Universität Frankfurt a. M. >
CFS Working Paper Series, Universität Frankfurt a. M. >
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http://hdl.handle.net/10419/25444
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| Title: | | Understanding the effects of government spending on consumption  |
| Authors: | | Galí, Jordi Vallés, Javier Wolman, Alexander L. |
| Issue Date: | | 2003 |
| Series/Report no.: | | CFS Working Paper 2004/23 |
| Abstract: | | 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. |
| Subjects: | | Rule-of-Thumb Consumers Fiscal Multiplier Government Spending Taylor Rules |
| JEL: | | E32 E62 |
| Document Type: | | Working Paper |
| Appears in Collections: | | CFS Working Paper Series, Universität Frankfurt a. M.
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