Fiscal Policy Puzzles and Intratemporal Substitution among Private Consumption, Government Spending and Leisure

Masataka Eguchi and Yuhki Hosoya
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Masataka Eguchi: Graduate School of Economics, Keio University
Yuhki Hosoya: Graduate School of Economics, Keio University

No 2009-032, Keio/Kyoto Joint Global COE Discussion Paper Series from Keio/Kyoto Joint Global COE Program

Abstract: This paper investigates how does the response of private consumption to government spending be changed by intratemporal substitution among private consumption, government spending and leisure. We show that the response of private consumption to government spending can be positive even if private consumption and government spending are not complements and private consumption and leisure are not substitutes. In this case, substitution between leisure and government spending plays important role. This view has been overlooked in previous work.

Pages: 8 pages
Date: 2009
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Persistent link: https://EconPapers.repec.org/RePEc:kei:dpaper:2009-032

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