The Effects of Government Spending on the Distribution of Consumption

Giacomo De Giorgi and Luca Gambetti

UFAE and IAE Working Papers from Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC)

Abstract: We study the effects of government spending on the distribution of consumption. We find a substantial degree of heterogeneity: consumption increases at the bottom and falls at the top of the distribution, implying a significant temporary reduction of con- sumption inequality. The effects of the shock display correlations of around -0.7/-0.9 with the percentage of stockholders within the decile. We interpret the results as in line and yielding support to models of limited participation where, while the Ricardian equivalence holds for rich households, for poor household, with no access to capital markets, the Keynesian multiplier is at work.

Keywords: Consumption; Heterogeneity; Government Spending; VAR. (search for similar items in EconPapers)
JEL-codes: C3 D12 E21 E63 (search for similar items in EconPapers)
Pages: 26
Date: 2012-06-22
New Economics Papers: this item is included in nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

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Working Paper: The Effects of Government Spending on the Distribution of Consumption (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:aub:autbar:905.12

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