Private and public consumption and counter-cyclical fiscal policy

Luigi Marattin

MPRA Paper from University Library of Munich, Germany

Abstract: This paper bulds a closed-economy NK-DSGE model with no capital, in which consumers value both private and public consumption and fiscal policy is determined by a feedback rule responding to output gap. We analyse how different degrees of substitutatibility/complementarity between private and public consumption and a pro/counter-cyclical stance of fiscal policy affect equilbrium determinacy and the response of the economy to a wide range of shocks. Results show that determinacy is ensured by counter-cyclical fiscal policy under complementarity; increasing substitutability also pro-cyclical stance becomes stable. Differences can be observed also in response to shocks.

JEL-codes: E62 E63 H40 (search for similar items in EconPapers)
Date: 2007-05, Revised 2007-12
New Economics Papers: this item is included in nep-dge and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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https://mpra.ub.uni-muenchen.de/9493/1/MPRA_paper_9493.pdf original version (application/pdf)

Related works:
Working Paper: Private and Public Consumption and Counter-Ciclical Fiscal Policy (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:9493

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