[go: up one dir, main page]

  EconPapers    
Economics at your fingertips  
 

Does Government Spending Crowd In Private Consumption? Theory and Empirical Evidence for the Euro Area

Günter Coenen and Roland Straub

No 2005/159, IMF Working Papers from International Monetary Fund

Abstract: In this paper, we revisit the effects of government spending shocks on private consumption within an estimated New-Keynesian DSGE model of the euro area featuring non-Ricardian households. Employing Bayesian inference methods, we show that the presence of non- Ricardian households is in general conducive to raising the level of consumption in response to government spending shocks when compared with the benchmark specification without non-Ricardian households. However, we find that there is only a fairly small chance that government spending shocks crowd in consumption, mainly because the estimated share of non-Ricardian households is relatively low, but also because of the large negative wealth effect induced by the highly persistent nature of government spending shocks.

Keywords: WP; government spending (search for similar items in EconPapers)
Pages: 37
Date: 2005-08-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (301)

Downloads: (external link)
http://www.imf.org/external/pubs/cat/longres.aspx?sk=18359 (application/pdf)

Related works:
Journal Article: Does Government Spending Crowd in Private Consumption? Theory and Empirical Evidence for the Euro Area (2005) Downloads
Working Paper: Does government spending crowd in private consumption? Theory and empirical evidence for the euro area (2005) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:imf:imfwpa:2005/159

Ordering information: This working paper can be ordered from
http://www.imf.org/external/pubs/pubs/ord_info.htm

Access Statistics for this paper

More papers in IMF Working Papers from International Monetary Fund International Monetary Fund, Washington, DC USA. Contact information at EDIRC.
Bibliographic data for series maintained by Akshay Modi ().

 
Page updated 2024-12-24
Handle: RePEc:imf:imfwpa:2005/159