Industry Evidence on the Effects of Government Spending
AbstractThis paper investigates the effects of government purchases at the industry level in order to shed light on the transmission mechanism for government spending on the aggregate economy. We create a new panel dataset that matches output and labor variables to industry-specific shifts in government demand. An increase in government demand raises output and hours, lowers real product wages and labor productivity, and has no effect on the markup. The estimates also imply approximately constant returns to scale. The findings are more consistent with the effects of government spending in the neoclassical model than the textbook New Keynesian model. (JEL E12, E23, E62, H50)
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Bibliographic InfoArticle provided by American Economic Association in its journal American Economic Journal: Macroeconomics.
Volume (Year): 3 (2011)
Issue (Month): 1 (January)
Other versions of this item:
- Christopher J. Nekarda & Valerie A. Ramey, 2010. "Industry evidence on the effects of government spending," Finance and Economics Discussion Series 2010-28, Board of Governors of the Federal Reserve System (U.S.).
- Christopher J. Nekarda & Valerie A. Ramey, 2010. "Industry Evidence on the Effects of Government Spending," NBER Working Papers 15754, National Bureau of Economic Research, Inc.
- E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian
- E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
- H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
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Blog mentionsAs found by EconAcademics.org, the blog aggregator for Economics research:
- Industry Evidence on the Effects of Government Spending
by Agent Continuum in Agent Continuum on 2010-06-14 05:36:43
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