Trend growth and the dynamic effects of government spending

The paper studies the macroeconomic effects of government spending shocks in an economy characterized by positive trend growth. It shows that the lower is the trend growth rate the less inflationary are government spending shocks and vice versa. Moreover, on impact output is higher but exhibits less persistence the lower is trend growth, an effect that also characterizes consumption and the government spending multiplier, given that consumption and labor are somewhat complementary.

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Year of publication:	2011
Authors:	Tesfaselassie, Mewael F.
Publisher:	Kiel : Kiel Institute for the World Economy (IfW)
Subject:	Finanzpolitik \| Öffentliche Ausgaben \| Schock \| Multiplikator \| Wirtschaftswachstum \| Preisrigidität \| Lohnrigidität \| Theorie \| Trend growth \| price and wage staggering \| government spending multiplier

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Series:	Kiel Working Paper ; 1678
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Working Paper
Language:	English
Other identifiers:	645187232 [GVK] hdl:10419/45877 [Handle] RePEc:zbw:ifwkwp:1678 [RePEc]
Classification:	E21 - Consumption; Saving ; E62 - Fiscal Policy; Public Expenditures, Investment, and Finance; Taxation ; H31 - Household
Source:	EconStor

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