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Private Sector Consumption Behavior and Non-Keynesian Effects of Fiscal Policy

Author

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  • Ms. Rina Bhattacharya

Abstract

This paper explores the hypothesis that the propensity to consume out of income is not constant but varies, perhaps in a nonlinear fashion, with fiscal variables. It examines whether there is any empirical evidence to support the hypothesis that households move from non-Ricardian to Ricardian behavior as government debt reaches high levels and as uncertainty about future taxes increases. The paper also examines the possibility of a relationship (along the lines of the Bertola-Drazen model) between the propensity to consume out of income and the government consumption-to-GDP ratio.

Suggested Citation

  • Ms. Rina Bhattacharya, 1999. "Private Sector Consumption Behavior and Non-Keynesian Effects of Fiscal Policy," IMF Working Papers 1999/112, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:1999/112
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    Citations

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    Cited by:

    1. Ianc, Nicolae-Bogdan & Turcu, Camelia, 2020. "So alike, yet so different: Comparing fiscal multipliers across EU members and candidates," Economic Modelling, Elsevier, vol. 93(C), pages 278-298.
    2. Piotr Ciżkowicz & Grzegorz Parosa & Andrzej Rzońca, 2022. "Fiscal tensions and risk premium," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 49(3), pages 833-896, August.
    3. Joanna Siwńska, 2005. "Wpływ polityki fiskalnej na konsumpcję gospodarstw domowych w krajach Unii Europejskiej," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 7-8, pages 85-100.
    4. António Afonso, 2001. "Non-Keynesian Effects of Fiscal Policy in the EU-15," Working Papers Department of Economics 2001/07, ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa.
    5. Paweł Borys & Piotr Ciżkowicz & Andrzej Rzońca, 2014. "Panel Data Evidence on the Effects of Fiscal Policy Shocks in the EU New Member States," Fiscal Studies, Institute for Fiscal Studies, vol. 35, pages 189-224, June.
    6. Marek Lubiński, 2015. "Mnożnik fiskalny: reaktywacja," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 1, pages 5-26.
    7. Nicolae-Bogdan Ianc & Camelia Turcu, 2019. "So alike, yet so different: comparing fiscal multipliers across E(M)U candidates," Working Papers 2019.03, International Network for Economic Research - INFER.
    8. Ikuo Saito, 2016. "Fading Ricardian Equivalence in Ageing Japan," IMF Working Papers 2016/194, International Monetary Fund.
    9. Ms. Sanchita Mukherjee & Ms. Rina Bhattacharya, 2010. "Private Sector Consumption and Government Consumption and Debt in Advanced Economies: An Empirical Study," IMF Working Papers 2010/264, International Monetary Fund.
    10. Johansson, Martin & Jönsson, Kristian, 2003. "Public debt and the effects of government expenditure on private consumption - A Kalman filter analysis of the Swedish experience 1970-1997," Working Papers 2003:3, Lund University, Department of Economics.
    11. Rina Bhattacharya & Sanchita Mukherjee, 2013. "Non-Keynesian effects of fiscal policy in OECD economies: an empirical study," Applied Economics, Taylor & Francis Journals, vol. 45(29), pages 4122-4136, October.
    12. Bernadeta Baran, 2014. "Budgetary Discipline And Internal Devaluation – Estonian Method To Overcome The Crisis," Equilibrium. Quarterly Journal of Economics and Economic Policy, Institute of Economic Research, vol. 9(2), pages 9-23, June.

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