English, Article, Journal or magazine article edition: The Output, Employment, and Interest Rate Effects of Government Consumption S. Rao Aiyagari; Lawrence J. Christiano; Martin Eichenbaum

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Bookmark: http://trove.nla.gov.au/version/141273
Physical Description
  • preprint
Language
  • English

Edition details

Title
  • The output, employment, and interest rate effects of government consumption
Author
  • S. Rao Aiyagari
  • Lawrence J. Christiano
  • Martin Eichenbaum
Physical Description
  • preprint
Notes
  • This paper investigates the impact of aggregate variables of changes in government consumption in the context of a stochastic, neoclassical growth model. We show, theoretically, that the impact on output and employment of a persistent change in government consumption exceeds that of a temporary change. We also show that, in principle, there can be an analog to the Keynesian multiplier in the neoclassical growth model. Finally, in an empirically plausible version of the model, we show that the interest rate impact of a persistent government consumption shock exceeds that of a temporary one. Our results provide counterexamples to existing claims in the literature.
  • Expenditures, Public ; Employment (Economic theory) ; Interest rates
  • RePEc:fip:fedmem:25
  • This paper investigates the impact on aggregate variables of changes in government consumption in the context of a stochastic, neoclassical growth model. We show, theoretically, that the impact on output and employment of a persistent change in government consumption exceeds that of a temporary change. We also show that, in principle, there can be an analog to the Keynesian multiplier in the neoclassical growth model. Finally, in an empirically plausible version of the model, we show that the interest rate impact of a persistent government consumption shock exceeds that of a temporary one. Our results provide counter examples to existing claims in the literature.
  • RePEc:nbr:nberwo:3330
  • RePEc:fip:fedmwp:456
Language
  • English
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