Serie: Documentos de Trabajo. 0321.
Autor: Jordi Galí, J. David López Salido y Javier Vallés.
Temas: Inversión empresarial | Métodos cuantitativos | Economía Internacional | Consumo y ahorro | Banco de España.
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Resumen
Recent evidence on the effect of government spending shocks on consumption cannot be easily reconciled with existing optimizing business cycle models. We extend the standard New Keynesian model to allow for the presence of rule-of-thumb (non-Ricardian) consumers. We show how the interaction of the latter with sticky prices and deficit financing can account for the existing evidence on the effects of government spending.