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Effective Consumption and Non-Keynesian Effects of Fiscal Policy

Author

Listed:
  • Jönsson, Kristian

    (Sveriges Riksbank)

Abstract

In this paper, we elaborate on the notion of effective consumption and its role in determining the outcome of fiscal changes. More specifically, we investigate whether government consumption, by acting either as a complement or a substitute to private consumption, can help explain the non-Keynesian effects of fiscal policy that have been previously documented. We let the periods, where government consumption has acted as a complement or a substitute to private consumption, constitute different regimes. By using econometric methodologies that allow the these regimes to be determined both exogenously and endogenously, we find that the notion of effective consumption can assist in understanding the non-Keynesian effects of fiscal policy that have been documented in Denmark, Ireland and Sweden.

Suggested Citation

  • Jönsson, Kristian, 2004. "Effective Consumption and Non-Keynesian Effects of Fiscal Policy," Working Papers 2004:26, Lund University, Department of Economics.
    • Handle: RePEc:hhs:lunewp:2004_026
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Private Consumption; Fiscal Policy; Government Consumption;
    All these keywords.

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory

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