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The effects of a government expenditures shock

Author

Listed:
  • Bernardino Adão
  • José Brandão de Brito

Abstract

Government expenditure shocks increase output and do not decrease consumption. We argue this is due to the behavior of the central bank. A basic RBC model is able to deliver this result as long as the central bank behaves as the empirical evidence suggests.

Suggested Citation

  • Bernardino Adão & José Brandão de Brito, 2005. "The effects of a government expenditures shock," Working Papers w200514, Banco de Portugal, Economics and Research Department.
  • Handle: RePEc:ptu:wpaper:w200514
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    File URL: https://www.bportugal.pt/sites/default/files/anexos/papers/wp200514.pdf
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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.
    2. Andrew Mountford & Harald Uhlig, 2009. "What are the effects of fiscal policy shocks?," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 24(6), pages 960-992.
    3. Fuerst, Timothy S., 1992. "Liquidity, loanable funds, and real activity," Journal of Monetary Economics, Elsevier, vol. 29(1), pages 3-24, February.
    Full references (including those not matched with items on IDEAS)

    More about this item

    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles

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