The aim of this paper is to investigate the relationship between government spending and private consumption in the UK, for which there is scarce previous empirical evidence. We disaggregate public expenditure into three categories and search for the corresponding private consumption...

We derive analytic implicit form conditions for the qualitative analysis of government spending multipliers and the optimal level of government spending in presence of non-separability between private and public components of aggregate demand. Using the simplest neo-classical flexible price...

The need of fiscal consolidation is likely to dominate the policy agenda in the next decade; starting from statistical evidence on the conduct of fiscal policy in the EMU area over the last decade, this paper addresses the optimality of alternative fiscal consolidation strategies. In this paper, we...

We introduce distortionary taxes on consumption, labor and capital income into a New Keynesian model with Calvo pricing and nominal bonds. We study the relation between tax instruments and optimal monetary policy by computing simple rules for monetary and fiscal policy when one tax instrument at...

This paper investigates the effects of government spending on private consumption and investment in the European Union (EU). A certain consensus has been reached on the expansionary Keynesian effects of fiscal impulses on the economic activity. However, the existing empirical literature has...

Average hourly productivity has often been used to draw conclusions on long run per capita GDP growth, based on the assumption of full utilization of labor resources. In this paper, we argue that a failure to recognize the potential significant wedges among the two variables - even in the long...