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.
|Date of creation:||21 Apr 2009|
|Date of revision:||09 Sep 2009|
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- Silvestre, Joaquim, 1982. "Fixprice analysis in exchange economies," Journal of Economic Theory, Elsevier, vol. 26(1), pages 28-58, February.
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- Jean-Pascal Bénassy, 2007. "Ricardian equivalence and the intertemporal Keynesian multiplier," Post-Print halshs-00754250, HAL.
- Benassy, Jean-Pascal, 2007. "Ricardian equivalence and the intertemporal Keynesian multiplier," Economics Letters, Elsevier, vol. 94(1), pages 118-123, January.
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0432, National Bureau of Economic Research, Inc.
- Dreze, Jacques H, 1975. "Existence of an Exchange Equilibrium under Price Rigidities," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 16(2), pages 301-20, June.
- 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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