The Output Effects of (Non-Separable) Government Consumption at the Zero Lower Bound
We investigate the reaction of output to government spending shocks at the zero lower bound (ZLB) on the nominal interest rate when government and private consumption are non-separable in preferences. In particular, substitutability between private and government consumption significantly reduces the otherwise large output multipliers obtained at the ZLB. Additionally, the coupling of substitutability with a debt-stabilizing fiscal rule can generate negative output multipliers on impact.
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| Date of creation: | 2013 |
| Handle: | RePEc:ptu:wpaper:w201310 |
| Contact details of provider: | Postal: R. do Ouro, 27, 1100 LISBOA Phone: 21 321 32 00 Fax: 21 346 48 43 Web page: https://www.bportugal.pt Email: More information through EDIRC
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