Heterogeneity of Households and the Effects of Fiscal Policy in the CEE Countries

Piotr Krajewski ()
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Piotr Krajewski: University of Lodz, Institute of Economics.

Journal for Economic Forecasting, 2017, issue 2, 79-93

Abstract: We analyse the effects of fiscal policy in the non-EMU Central and Eastern European counties. The analysis is based on the new Keynesian model, which takes into account both optimizing Ricardian households and non-Ricardian households with liquidity constraints. Results of the study indicate that the share of non-Ricardian households has significant impact on fiscal multipliers. The government spending multiplier reaches almost 3 in the country with highest share of non-Ricardian households, whereas in the country with the lowest share of non-Ricardian households is lower than one. Also, the effects of government spending shocks on consumption are very sensitive to the share of households with liquidity constraints.

Keywords: fiscal multiplier; government spending; heterogeneity of households; non- Ricardian households; CEE countries (search for similar items in EconPapers)
JEL-codes: E62 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:rjr:romjef:v::y:2017:i:2:p:79-93

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