TY  - BOOK
AU  - Galí,Jordi
AU  - López-Salido,J.David
AU  - Vallés,Javier
ED  - National Bureau of Economic Research.
TI  - Understanding the Effects of Government Spending on Consumption
T2  - NBER working paper series
PY  - 2005///
CY  - Cambridge, Mass.
PB  - National Bureau of Economic Research
N1  - August 2005; Hardcopy version available to institutional subscribers
N2  - Recent evidence suggests that consumption rises in response to an increase in government spending. That finding cannot be easily reconciled with existing optimizing business cycle models. We extend the standard new Keynesian model to allow for the presence of rule-of-thumb consumers. We show how the interaction of the latter with sticky prices and deficit financing can account for the existing evidence on the effects of government spending
UR  - https://www.nber.org/papers/w11578
UR  - http://dx.doi.org/10.3386/w11578
ER  -