Abstract
This paper investigates the consequences of an exogenous increase in U.S. government purchases. We find that in response to such a shock, employment, output, and nonresidential investment rise, while real wages, residential investment, and consumption expenditures fall. The paper argues that a simple variant of the neoclassical growth model which distinguishes between nonresidential and residential investment is consistent with this evidence.Journal of Economic LiteratureClassification Numbers: E1, E6.
| Original language | English (US) |
|---|---|
| Pages (from-to) | 166-206 |
| Number of pages | 41 |
| Journal | Review of Economic Dynamics |
| Volume | 2 |
| Issue number | 1 |
| DOIs | |
| State | Published - Jan 1 1999 |
ASJC Scopus subject areas
- Economics and Econometrics
Fingerprint Dive into the research topics of 'Understanding the Effects of a Shock to Government Purchases'. Together they form a unique fingerprint.
Cite this
Edelberg, W., Eichenbaum, M., & Fisher, J. D. M. (1999). Understanding the Effects of a Shock to Government Purchases. Review of Economic Dynamics, 2(1), 166-206. https://doi.org/10.1006/redy.1998.0036