Private Sector Consumption Behavior and Non-Keynesian Effects of Fiscal Policy
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Summary:
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.
Series:
Working Paper No. 1999/112
Subject:
Consumption Expenditure Government consumption Income National accounts Private consumption Public debt
Frequency:
Annually
English
Publication Date:
August 1, 1999
ISBN/ISSN:
9781451853582/1018-5941
Stock No:
WPIEA1121999
Pages:
28
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