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dc.contributor.authorTenhofen, Jörnen_US
dc.contributor.authorWolff, Guntram B.en_US
dc.date.accessioned2010-07-02en_US
dc.date.accessioned2010-08-17T12:28:17Z-
dc.date.available2010-08-17T12:28:17Z-
dc.date.issued2010en_US
dc.identifier.urihttp://hdl.handle.net/10419/38803-
dc.description.abstractWe investigate the effects of government expenditure on private consumption when the private sector anticipates the fiscal shocks. In order to capture anticipation of fiscal policy, we develop a new method based on a structural vector autoregression (SVAR). By simulating data from a theoretical model featuring (imperfect) fiscal foresight, we demonstrate the ability of our new approach to correctly capture macroeconomic dynamics. We take advantage of the flexibility of our econometric approach and study those subcomponents of total government spending, which have different macroeconomic effects according to economic theory. Using post-WWII US data, we find that when taking into account anticipation, private consumption significantly decreases in response to a defense expenditure shock, whereas when considering shocks to non-defense spending, consumption increases significantly. A standard SVAR does not produce clear consumption responses, highlighting the importance of anticipation. Our results thus reconcile the different findings of the narrative and SVAR approaches to the study of fiscal policy effects.en_US
dc.language.isoengen_US
dc.publisherGraduate School of Economics Bonnen_US
dc.relation.ispartofseriesBonn econ discussion papers 2010,12en_US
dc.subject.ddc330en_US
dc.subject.stwFinanzpolitiken_US
dc.subject.stwÖffentliche Ausgabenen_US
dc.subject.stwGesamtwirtschaftlicher Konsumen_US
dc.subject.stwErwartungstheorieen_US
dc.subject.stwWirkungsanalyseen_US
dc.subject.stwSchätzungen_US
dc.subject.stwUSAen_US
dc.titleDoes anticipation of government spending matter? The role of (non-)defense spendingen_US
dc.typeWorking Paperen_US
dc.identifier.ppn630500568en_US
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungen-
Appears in Collections:Bonn Econ Discussion Papers, Bonn Graduate School of Economics (BGSE), Universität Bonn

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