Effects of Government Spending on the Current Account with Endogenous Time Preference

Wen‐Ya Chang, Hsueh‐Fang Tsai and Wen‐Fang Liu

Southern Economic Journal, 1998, vol. 64, issue 3, 728-740

Abstract: This paper extends a previous model to set up a small open economy with perfect capital mobility, and examines the effects of an unanticipated permanent rise in public spending on the optimal rates of private consumption and the current account. The novelty of the paper is consideration of the relationship between private and public consumption in the household's utility function as well as endogenous rates of time preference. It is found that the key factor determining the adjustment patterns of private consumption and the current account is the marginal utility of private consumption and of public spending, which results from endogenous recursive preferences.

Date: 1998
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1002/j.2325-8012.1998.tb00090.x

Related works:
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:wly:soecon:v:64:y:1998:i:3:p:728-740

Access Statistics for this article

More articles in Southern Economic Journal from John Wiley & Sons
Bibliographic data for series maintained by Wiley Content Delivery ().