Nonseparable Preferences, Frisch Labor Supply, and the Consumption Multiplier of Government Spending: One Solution to a Fiscal Policy Puzzle

Détails

ID Serval
serval:BIB_D48592153232
Type
Article: article d'un périodique ou d'un magazine.
Collection
Publications
Titre
Nonseparable Preferences, Frisch Labor Supply, and the Consumption Multiplier of Government Spending: One Solution to a Fiscal Policy Puzzle
Périodique
Journal of Money, Credit and Banking
Auteur⸱e⸱s
BILBIIE F.O.
ISSN
0022-2879
Statut éditorial
Publié
Date de publication
02/2011
Peer-reviewed
Oui
Volume
43
Numéro
1
Pages
221-251
Langue
anglais
Résumé
This paper proposes a theoretical explanation of the positive consumption multipliers of government spending often found in the data. The explanation requires two ingredients. First, labor demand expands (e.g., prices are sticky). Second, general nonseparable preferences over consumption and leisure should be such that the two goods are substitutes; that is, Frisch labor supply elasticity is lower than the constant‐consumption elasticity; this implies that constant‐consumption labor supply shifts left. Existing empirical evidence on the relative magnitudes of the two elasticities supports this hypothesis. The parametric conditions under which the result occurs are consistent with restrictions of concavity and noninferiority of consumption and leisure.
Mots-clé
non-separable preferences, fiscal policy, government spend- ing, private consumption, inferior goods.
Web of science
Création de la notice
01/11/2018 8:38
Dernière modification de la notice
20/08/2019 15:54
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