The effects of a government expenditures shock

Bernardino Adao () and José Brandão de Brito

Working Papers from Banco de Portugal, Economics and Research Department

Abstract: Government expenditure shocks increase output and do not decrease consumption. We argue this is due to the behavior of the central bank. A basic RBC model is able to deliver this result as long as the central bank behaves as the empirical evidence suggests.

JEL-codes: E2 E3 (search for similar items in EconPapers)
Date: 2005
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Persistent link: https://EconPapers.repec.org/RePEc:ptu:wpaper:w200514

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