Propagation Mechanisms for Government Spending Shocks: A Bayesian Comparison

Anna Kormilitsina () and Sarah Zubairy

No 8646, EcoMod2015 from EcoMod

Abstract: The inability of a simple real business cycle model to predict a rise in consumption in response to increased government expenditures observed in many empirical studies, has stimulated the development of alternative theories of government spending shocks. Our objective is to evaluate these models in terms of how they fit the data.We use Bayesian approach to estimate and compare macroeconomic models of government spending.We find that neither of the considered transmission mechanisms for government spending helps improve the fit of the baseline model. Moreover, all estimated models fail to predict a rise in consumption in response to increased government spending.

Keywords: USA; Macroeconometric modeling; Business cycles (search for similar items in EconPapers)
Date: 2015-07-01
New Economics Papers: this item is included in nep-mac
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http://ecomod.net/system/files/govsp_20131105.pdf

Related works:
Journal Article: Propagation Mechanisms for Government Spending Shocks: A Bayesian Comparison (2018)
Working Paper: Propagation Mechanisms for Government Spending Shocks: A Bayesian Comparison (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:ekd:008007:8646

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