Nonseparable Preferences, Fiscal Policy Puzzles, and Inferior Goods

Florin Bilbiie

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Abstract: Nonseparable preferences over consumption and leisure can generate an increase in private consumption in response to government spending, as found in the data, in a frictionless business cycle model. However, the conditions on preferences required for these result to obtain hold if and only if the consumption good is inferior. Similarly, positive co-movement of consumption and hours worked occurs if and only if either consumption or leisure is inferior.

Keywords: nonseparable preferences; fiscal policy; government spending; private consumption; inferior goods (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (41)

Published in Journal of Money, Credit and Banking, 2009, 41 (2-3), pp.443-450. ⟨10.1111/j.1538-4616.2009.00213.x⟩

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Journal Article: Nonseparable Preferences, Fiscal Policy Puzzles, and Inferior Goods (2009)
Working Paper: Nonseparable Preferences, Fiscal Policy Puzzles, and Inferior Goods (2009)
Working Paper: Nonseparable Preferences, Fiscal Policy Puzzles, and Inferior Goods (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-00622869

DOI: 10.1111/j.1538-4616.2009.00213.x

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