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

Bhattacharya, Rina

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

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Year of publication:	1999
Authors:	Bhattacharya, Rina
Other Persons:	Bhattacharya, Rina (contributor)
Publisher:	Washington, D.C : International Monetary Fund
Subject:	Finanzpolitik \| Fiscal policy \| Öffentliche Schulden \| Public debt \| Konsumtheorie \| Consumption theory \| Öffentlicher Konsum \| Public consumption \| OECD-Staaten \| OECD countries \| Ricardianische Äquivalenz \| Ricardian equivalence \| Privatwirtschaft \| Private sector