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Does Government Spending Crowd In Private Consumption? Theory and Empirical Evidence for the Euro Area / Günter Coenen, Roland Straub.
- Format:
- Book
- Government document
- Author/Creator:
- Coenen, Günter.
- Series:
- IMF Working Papers; Working Paper ; No. 2005/159
- IMF Working Papers
- Language:
- English
- Subjects (All):
- Consumption (Economics)--European Union countries--Econometric models.
- Consumption (Economics).
- Fiscal policy--European Union countries--Econometric models.
- Fiscal policy.
- Crowding out (Economics)--European Union countries--Econometric models.
- Crowding out (Economics).
- European Union countries--Appropriations and expenditures--Econometric models.
- European Union countries.
- Physical Description:
- 1 online resource (37 p.)
- Place of Publication:
- Washington, D.C. : International Monetary Fund, 2005.
- Language Note:
- English
- Summary:
- 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.
- Contents:
- ""Contents""; ""I. INTRODUCTION""; ""II. THE MODEL""; ""III. BAYESIAN ESTIMATION OF THE MODEL""; ""IV. ASSESSING THE ROLE OF NON- RICARDIAN HOUSEHOLDS""; ""V. SENSITIVITY ANALYSIS""; ""VI. CONCLUSIONS""; ""References""
- Notes:
- "August 2005."
- Includes bibliographical references.
- Description based on print version record.
- ISBN:
- 9786613828262
- 9781462370009
- 1462370004
- 9781452717876
- 1452717877
- 9781283515818
- 1283515814
- 9781451907148
- 1451907141
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