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Big G

Author

Listed:
  • Lydia Cox
  • Gernot J. Müller
  • Ernesto Pastén
  • Raphael Schoenle
  • Michael Weber

Abstract

“Big G” typically refers to aggregate government spending on a homogeneous good. We confront this notion with five facts for the universe of federal purchases. First, they are volatile and account for the largest part of the short-run variation in total spending. Second, the origin of their variation is granular. Third, purchases are subject to procurement and bidding. Fourth, they are concentrated in long-term contracts. Fifth, their composition is biased toward sectors in which private sector prices are sticky. We develop a two-sector New Keynesian model consistent with these facts and find where the government spends is key for aggregate effects.

Suggested Citation

  • Lydia Cox & Gernot J. Müller & Ernesto Pastén & Raphael Schoenle & Michael Weber, 2024. "Big G," Journal of Political Economy, University of Chicago Press, vol. 132(10), pages 3260-3297.
    • Handle: RePEc:ucp:jpolec:doi:10.1086/730426
    DOI: 10.1086/730426
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    Other versions of this item:

    • Lydia Cox & Gernot Muller & Ernesto Pasten & Raphael Schoenle & Michael Weber, 2020. "Big G," Working Papers Central Bank of Chile 878, Central Bank of Chile.
    • Lydia Cox & Gernot J. Müller & Ernesto Pasten & Raphael Schoenle & Michael Weber, 2020. "Big G," Working Papers 2020-36, Becker Friedman Institute for Research In Economics.
    • Lydia Cox & Gernot J. Müller & Ernesto Pasten & Raphael Schoenle, 2020. "Big G," Working Papers 20-15, Federal Reserve Bank of Cleveland.
    • Lydia Cox & Gernot Müller & Ernesto Pasten & Raphael S. Schoenle & Michael Weber & Michael Weber, 2020. "Big G," CESifo Working Paper Series 8229, CESifo.
    • Lydia Cox & Gernot Müller & Ernesto Pastén & Raphael Schoenle & Michael Weber, 2020. "Big G," NBER Working Papers 27034, National Bureau of Economic Research, Inc.
    • Schoenle, Raphael & Müller, Gernot & Pasten, Ernesto & Weber, Michael, 2020. "Big G," CEPR Discussion Papers 14625, C.E.P.R. Discussion Papers.

    References listed on IDEAS

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    More about this item

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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