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Can government spending increase private consumption? The role of complementarity

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  • Ganelli, Giovanni
  • Tervala, Juha

Abstract

It is empirically observed that private consumption responds positively to fiscal shocks. We offer an explanation for this stylized fact, based on the idea of complementarity between public and private consumption.

Suggested Citation

  • Ganelli, Giovanni & Tervala, Juha, 2009. "Can government spending increase private consumption? The role of complementarity," Economics Letters, Elsevier, vol. 103(1), pages 5-7, April.
  • Handle: RePEc:eee:ecolet:v:103:y:2009:i:1:p:5-7
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    References listed on IDEAS

    as
    1. Linnemann, Ludger & Schabert, Andreas, 2004. "Can fiscal spending stimulate private consumption?," Economics Letters, Elsevier, vol. 82(2), pages 173-179, February.
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    8. Olivier Blanchard & Roberto Perotti, 2002. "An Empirical Characterization of the Dynamic Effects of Changes in Government Spending and Taxes on Output," The Quarterly Journal of Economics, Oxford University Press, vol. 117(4), pages 1329-1368.
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