Year: 2018
Type: article
Abstract: The inability of a simple real business cycle model to predict a rise in consumption in response to increased government expenditures, observed in many empirical studies, has stimulated the development of alternative theories of government spending shocks. Using the Bayesian approach, we evaluate the quantitative performance of five extant models, and find that neither of the considered transmission mechanisms for government spending helps improve the fit of the baseline model. Moreover, we find that consumption decreases in all estimated models in response to a rise in government spending.
DOI: 10.1111/jmcb.12555
Authors: ANNA KORMILITSINA, SARAH ZUBAIRY
Institutions: Southern Methodist University, Texas A&M University
Language: English
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W2482225604