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Housework and Fiscal Expansions

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  • Stefano Gnocchi
  • Daniela Hauser
  • Evi Pappa

Abstract

We build an otherwise-standard business cycle model with housework, calibrated consistently with data on time use, in order to discipline consumption-hours complementarity and relate its strength to the size of fiscal multipliers. We show that if substitutability between home and market goods is calibrated on the empirically relevant range, consumption-hours complementarity is large and the model generates fiscal multipliers that agree with the evidence. Hence, our analysis supports the relevance of consumption-hours complementarity for fiscal multipliers. However, we also find that explicitly modeling the home sector is more appealing than restricting to the consumption-leisure margin and/or to the preferences proposed by Greenwood, Hercowitz and Huffman (1988). A housework model can imply substantial complementarity, without low wealth effects contradicting the microeconomic evidence.

Suggested Citation

  • Stefano Gnocchi & Daniela Hauser & Evi Pappa, 2014. "Housework and Fiscal Expansions," Staff Working Papers 14-34, Bank of Canada.
  • Handle: RePEc:bca:bocawp:14-34
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    1. Housework and Fiscal Expansions
      by Christian Zimmermann in NEP-DGE blog on 2014-09-08 18:55:01

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    2. Stempel, Daniel & Neyer, Ulrike, 2019. "The Effects of Gender Discrimination in DSGE Models," VfS Annual Conference 2019 (Leipzig): 30 Years after the Fall of the Berlin Wall - Democracy and Market Economy 203556, Verein für Socialpolitik / German Economic Association.
    3. Henrique S. Basso & Omar Rachedi, 2018. "The young, the old, and the government: demographics and fiscal multipliers," Working Papers 1837, Banco de España.
    4. Antonello D'Alessandro & Giulio Fella & Leonardo Melosi, 2019. "Fiscal Stimulus With Learning‐By‐Doing," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 60(3), pages 1413-1432, August.
    5. Angela Capolongo & Daniel Gros, 2020. "The ECB is running out of policy space: can fiscal policy help?," Economics and Business Letters, Oviedo University Press, vol. 9(3), pages 216-220.
    6. Alessio Moro & Omar Rachedi, 2018. "The changing structure of goverment consumption spending," Working Papers 1840, Banco de España.
    7. Christian Bredemeier, 2015. "Household Specialization and the Labor-Supply Elasticities of Women and Men," Working Paper Series in Economics 81, University of Cologne, Department of Economics.
    8. Neyer, Ulrike & Stempel, Daniel, 2019. "Macroeconomic effects of gender discrimination," DICE Discussion Papers 324, University of Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    9. Matthew Greenblatt, 2020. "In-kind transfers and home production," Review of Economics of the Household, Springer, vol. 18(4), pages 1189-1211, December.
    10. Miyamoto, Wataru & Nguyen, Thuy Lan & Sheremirov, Viacheslav, 2019. "The effects of government spending on real exchange rates: Evidence from military spending panel data," Journal of International Economics, Elsevier, vol. 116(C), pages 144-157.
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    12. Brueckner, Markus & Pappa, Evi & Valentinyi, Akos, 2019. "Local Autonomy and Government Spending Multipliers: Evidence from European Regions," CEPR Discussion Papers 14106, C.E.P.R. Discussion Papers.

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    More about this item

    Keywords

    Fiscal policy; Business fluctuations and cycles;

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy

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