Useful Government Spending, Direct Crowding Out and Fiscal Policy Interdependence

Giovanni Ganelli

The Warwick Economics Research Paper Series (TWERPS) from University of Warwick, Department of Economics

Abstract: This paper introduces perfect substitutability between private and public consumption in a dynamic, open economy with imperfect competition and nominal rigidities. This implies a direct crowding-out effect that, generalizing to the two-country case some well-known properties of a closed economy, tends to reduce consumption following both domestic and foreign expansions. A less expected result is that sub-stitutability has a positive effect on the short-run output spillover.

Keywords: COMPETITION; PRICES; FISCAL POLICY (search for similar items in EconPapers)
JEL-codes: E62 F41 F42 H4 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2000
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Citations: View citations in EconPapers (5)

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Related works:
Journal Article: Useful government spending, direct crowding-out and fiscal policy interdependence (2003)
Working Paper: Useful Government Spending, Direct Crowding-Out and Fiscal Policy Interdependence (2000)
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Persistent link: https://EconPapers.repec.org/RePEc:wrk:warwec:547

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