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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
    as

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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
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    6. 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.
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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, President and Fellows of Harvard College, vol. 117(4), pages 1329-1368.
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    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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