The Keynesian multiplier and the Pigou effect under substitution between private and public consumption
In this paper we present a fixprice model in which private and public consumption show some degree of substitution. We offer formulae for the Keynesian multiplier which depend on this degree of substitution. We also show that there is a Pigou effect and that, sometimes, this effect is larger than the Keynesian multiplier.
Volume (Year): 30 (2010)
Issue (Month): 1 ()
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- Barro, Robert J, 1981.
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- Jean-Pascal Benassy, 1975. "Neo-Keynesian Disequilibrium Theory in a Monetary Economy," Review of Economic Studies, Oxford University Press, vol. 42(4), pages 503-523.
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