Keeping up with the Joneses and the consumption response to government spending

Kevin X.D. Huang, Fengqi Liu, Qinglai Meng and Jianpo Xue

Economics Letters, 2022, vol. 220, issue C

Abstract: A key empirical regularity regrading the effect of fiscal policy is that private consumption tends to increase in response to a hike in government spending. In this paper, we provide an explanation for this stylized fact based on the notion of Keeping Up with the Joneses (KUJ), another empirical observation well documented in the literature.

Keywords: Keeping Up with the Joneses; Private consumption; Government spending (search for similar items in EconPapers)
JEL-codes: E21 E32 E62 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:220:y:2022:i:c:s0165176522003433

DOI: 10.1016/j.econlet.2022.110869

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