Revisiting the supply side effects of government spending

• 成果类型: Article
• 署名作者: Angeletos, George-Marios; Panousi, Vasia
• 署名单位: Massachusetts Institute of Technology (MIT); National Bureau of Economic Research
• 刊物名称: JOURNAL OF MONETARY ECONOMICS
• ISSN/ISSBN: 0304-3932
• DOI: 10.1016/j.jmoneco.2008.12.010
• 发表日期: 2009
• 页码: 137-153
• 关键词: Fiscal policy; Government spending; Incomplete risk sharing; Entrepreneurial risk

摘要

We revisit the macroeconomic effects of government consumption in the neoclassical growth model when agents face uninsured idiosyncratic investment risk. Under complete markets, a permanent increase in government consumption has no long-run effect on interest rates and capital intensity, while it increases work hours due to the negative wealth effect. These results are upset once we allow for incomplete markets. The same negative wealth effect now causes a reduction in risk taking and the demand for investment. This leads to a lower risk-free rate and, under certain conditions, also to a lower capital-labor ratio and lower productivity. (C) 2009 Elsevier B.V. All rights reserved.