The Output, Employment, and Interest Rate Effects of Government Consumption

S. Aiyagari, Lawrence Christiano and Martin Eichenbaum

No 3330, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: 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.

Date: 1990-04
Note: EFG
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (28)

Published as Journal of Monetary Economics, 1992

Downloads: (external link)
http://www.nber.org/papers/w3330.pdf (application/pdf)

Related works:
Journal Article: The output, employment, and interest rate effects of government consumption (1992)
Working Paper: The output, employment, and interest rate effects of government consumption (1990)
Working Paper: The output, employment, and interest rate effects of government consumption (1990)
Working Paper: The output, employment, and interest rate effects of government consumption (1990)
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:nbr:nberwo:3330

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w3330

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().