Understanding the effects of a shock to government purchases
Abstract: This paper investigates the consequences of an exogenous increase in U.S. government purchase. We find the 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 neoclassical growth model which distinguishes between nonresidential and residential investment is consistent with this evidence.
Keywords: Expenditures, Public;
File(s): File format is application/pdf http://www.chicagofed.org/digital_assets/publications/working_papers/1998/wp98_7.pdf
Provider: Federal Reserve Bank of Chicago
Part of Series: Working Paper Series
Publication Date: 1998