Propagation Mechanisms for Government Spending Shocks: A Bayesian Comparison Academic Article

abstract

• 2018 The Ohio State University The inability of a simple real business cycle model to predict a rise in consumption in response to increased government expenditures, observed in many empirical studies, has stimulated the development of alternative theories of government spending shocks. Using the Bayesian approach, we evaluate the quantitative performance of five extant models, and find that neither of the considered transmission mechanisms for government spending helps improve the fit of the baseline model. Moreover, we find that consumption decreases in all estimated models in response to a rise in government spending.

authors

• Zubairy, Sarah

published proceedings

• JOURNAL OF MONEY CREDIT AND BANKING

author list (cited authors)

• Kormilitsina, A., & Zubairy, S.

citation count

• 10

complete list of authors

• Kormilitsina, Anna||Zubairy, Sarah

publication date

• October 2018

publisher

• Wiley  Publisher

published in

• Journal of Money, Credit and Banking  Journal

keywords

• Bayesian Comparison
• Deep Habits
• Government Spending Shock
• Rule Of Thumb Consumers
• Transmission Mechanism

Digital Object Identifier (DOI)

• 10.1111/jmcb.12555

start page

• 1571

end page

• 1616

volume

• 50

issue

• 7

URL

• http%3A%2F%2Fdx.doi.org%2F10.1111%2Fjmcb.12555