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The effects of a government expenditures shock

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  • Bernardino Adão
  • José Brandão de Brito

Abstract

Government expenditure shocks increase output and do not decrease consumption. We argue this is due to the behavior of the central bank. A basic RBC model is able to deliver this result as long as the central bank behaves as the empirical evidence suggests.

Suggested Citation

  • Bernardino Adão & José Brandão de Brito, 2005. "The effects of a government expenditures shock," Working Papers w200514, Banco de Portugal, Economics and Research Department.
    • Handle: RePEc:ptu:wpaper:w200514
    as

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    References listed on IDEAS

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    More about this item

    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles

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