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- W2170202353 abstract "This paper uses the old Keynesian representative agent model developed by Roger E. A. Farmer [ Expectations, Employment and Prices . New York: Oxford University Press (2010)] to answer two questions: (1) Do increased government purchases crowd out private consumption? (2) Do increased government purchases reduce unemployment? Farmer compared permanent tax-financed expenditure paths and showed that the answer to (1) was yes and the answer to (2) was no. We generalize his result to temporary bond-financed paths of government purchases that are similar to the actual path that occurred during WWII. We find that a temporary increase in government purchases does crowd out private consumption expenditure as in Farmer. However, in contrast to Farmer's experiment, we find that a temporary increase in government purchases can also reduce unemployment." @default.
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- W2170202353 date "2011-11-04" @default.
- W2170202353 modified "2023-09-23" @default.
- W2170202353 title "DOES FISCAL POLICY MATTER? BLINDER AND SOLOW REVISITED" @default.
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- W2170202353 doi "https://doi.org/10.1017/s1365100511000575" @default.
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