Heterogeneous Consumers and Fiscal Policy Shocks

Emily Anderson, Atsushi Inoue and Barbara Rossi

Journal of Money, Credit and Banking, 2016, vol. 48, issue 8, 1877-1888

Abstract: This paper studies empirical facts regarding the effects of unexpected changes in aggregate macroeconomic fiscal policies on consumers that differ depending on individual characteristics. We use data from the Consumption Expenditure Survey to estimate individual‐level responses and multipliers for government spending. We find that unexpected fiscal shocks have substantially different effects on consumers depending on their income and age levels: the wealthiest individuals tend to behave according to predictions of standard Real Business Cycle (RBC) models, whereas the poorest ones behave according to standard IS–LM (non‐Ricardian) models, most likely due to credit constraints. Furthermore, government spending policy shocks tend to decrease consumption inequality.

Date: 2016
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Citations: View citations in EconPapers (44)

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https://doi.org/10.1111/jmcb.12366

Related works:
Working Paper: Heterogeneous Consumers and Fiscal Policy Shocks (2015)
Working Paper: Heterogeneous consumers and fiscal policy shocks (2015)
Working Paper: Heterogeneous Consumers and Fiscal Policy Shocks (2013)
Working Paper: Heterogeneous Consumers and Fiscal Policy Shocks (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:wly:jmoncb:v:48:y:2016:i:8:p:1877-1888

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