Private Sector Consumption Behavior and Non-Keynesian Effects of Fiscal Policy

Rina Bhattacharya

No 1999/112, IMF Working Papers from International Monetary Fund

Abstract: This paper explores the hypothesis that the propensity to consume out of income is not constant but varies, perhaps in a nonlinear fashion, with fiscal variables. It examines whether there is any empirical evidence to support the hypothesis that households move from non-Ricardian to Ricardian behavior as government debt reaches high levels and as uncertainty about future taxes increases. The paper also examines the possibility of a relationship (along the lines of the Bertola-Drazen model) between the propensity to consume out of income and the government consumption-to-GDP ratio.

Keywords: WP; government; fiscal policy; government debt; government consumption; Ricardian behavior; non-Keynesian effects; household income; debt stabilization programme; panel data estimation technique; GDP ratio; Income; Private consumption (search for similar items in EconPapers)
Pages: 28
Date: 1999-08-01
References: Add references at CitEc
Citations: View citations in EconPapers (13)

Downloads: (external link)
http://www.imf.org/external/pubs/cat/longres.aspx?sk=3253 (application/pdf)

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:imf:imfwpa:1999/112

Ordering information: This working paper can be ordered from
http://www.imf.org/external/pubs/pubs/ord_info.htm

Access Statistics for this paper

More papers in IMF Working Papers from International Monetary Fund International Monetary Fund, Washington, DC USA. Contact information at EDIRC.
Bibliographic data for series maintained by Akshay Modi ().