Download or read book Consumption Behavior and the Effects of Government Fiscal Policies written by Randall P. Mariger and published by Harvard University Press. This book was released on 1986 with total page 292 pages. Available in PDF, EPUB and Kindle. Book excerpt: In Consumption Behavior and the Effects of Government Fiscal Policies, Randall Mariger explores how people make decisions about how much to consume and save over their lifetimes. An understanding of these issues illuminates not only individual behavior but important properties of the macro economy as well. The most popular framework for analyzing consumption has been the life-cycle theory. Mariger tests two fundamental, and controversial, assumptions underlying the theory--that there are no planned bequests and that human capital is marketable. To do this, he fits a structural consumption model that incorporates endogenous liquidity constraints (non-marketability of human capital), but no planned bequests, to data on a cross-section of U. S. families. This estimated model, in conjunction with estimates of alternative models, enables him to make inferences about the respective effects of liquidity constraints and social security wealth on consumption. This latter effect yields indirect evidence concerning planned bequests. Mariger also presents direct evidence concerning bequest behavior. Among his findings are that the model fits the data very well in spite of its tight theoretical structure; that liquidity constraints are prevalent and have important effects on consumption behavior; that planned bequests appear not to be common among families in the lower 99.1% of the wealth distribution; and that families in the upper 0.9% of the wealth distribution appear to plan substantial bequests. Mariger devotes the latter part of his book to studying the implications of his estimated consumption model for the effects of government fiscal policies. More specifically, he simulates the model to infer the effects of government tax/debt policy, as well as those of the social security system, on aggregate savings.

Download or read book Private Sector Consumption Behavior and Non Keynesian Effects of Fiscal Policy written by Ms.Rina Bhattacharya and published by International Monetary Fund. This book was released on 1999-08-01 with total page 29 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper explores the hypothesis that the propensity to consume out of income is not constant but varies, perhaps in a nonlinear fashion, with fiscal variables. It examines whether there is any empirical evidence to support the hypothesis that households move from non-Ricardian to Ricardian behavior as government debt reaches high levels and as uncertainty about future taxes increases. The paper also examines the possibility of a relationship (along the lines of the Bertola-Drazen model) between the propensity to consume out of income and the government consumption-to-GDP ratio.

Download or read book Monetary fiscal Policy Interactions and Fiscal Stimulus written by Troy Davig and published by . This book was released on 2009 with total page 39 pages. Available in PDF, EPUB and Kindle. Book excerpt: Increases in government spending trigger substitution effects-both inter- and intra-temporal-and a wealth effect. The ultimate impacts on the economy hinge on current and expected monetary and fiscal policy behavior. Studies that impose active monetary policy and passive fiscal policy typically find that government consumption crowds out private consumption: higher future taxes create a strong negative wealth effect, while the active monetary response increases the real interest rate. This paper estimates Markov-switching policy rules for the United States and finds that monetary and fiscal policies fluctuate between active and passive behavior. When the estimated joint policy process is imposed on a conventional new Keynesian model, government spending generates positive consumption multipliers in some policy regimes and in simulated data in which all policy regimes are realized. The paper reports the model's predictions of the macroeconomic impacts of the American Recovery and Reinvestment Act's implied path for government spending under alternative monetary-fiscal policy combinations.

Download or read book Handbook of Public Sector Economics written by Donijo Robbins and published by Routledge. This book was released on 2017-09-25 with total page 577 pages. Available in PDF, EPUB and Kindle. Book excerpt: The Handbook of Public Sector Economics builds an understanding of the role of public economics in public administration, public policy, and decision making. The handbook introduces a wide variety of current issues related to the public provision and production of goods and services. The volume documents the history of economics and fiscal doctrine, explores the theory of public goods and the structures from which resources are collected and expanded, and analyzes heavily debated issues of economics that are important to current and future practitioners of public policy and administration. It focuses on the effects of fiscal policy on savings and investment, consumer behavior, labor supply, wealth, property, and trade. Written in a simple and straightforward style, the initial chapters establish the foundation of public economics, with the subsequent chapters addressing the collection and distribution of government resources and market reactions to fiscal policies.

Download or read book Monetary fiscal Policy Interactions and Fiscal Stimulus written by Troy Davig and published by . This book was released on 2009 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Increases in government spending trigger substitution effects-both inter- and intra-temporal-and a wealth effect. The ultimate impacts on the economy hinge on current and expected monetary and fiscal policy behavior. Studies that impose active monetary policy and passive fiscal policy typically find that government consumption crowds out private consumption: higher future taxes create a strong negative wealth effect, while the active monetary response increases the real interest rate. This paper estimates Markov-switching policy rules for the United States and finds that monetary and fiscal policies fluctuate between active and passive behavior. When the estimated joint policy process is imposed on a conventional new Keynesian model, government spending generates positive consumption multipliers in some policy regimes and in simulated data in which all policy regimes are realized. The paper reports the model's predictions of the macroeconomic impacts of the American Recovery and Reinvestment Act's implied path for government spending under alternative monetary-fiscal policy combinations.

Download or read book Fiscal Policy after the Financial Crisis written by Alberto Alesina and published by University of Chicago Press. This book was released on 2013-06-25 with total page 596 pages. Available in PDF, EPUB and Kindle. Book excerpt: The recent recession has brought fiscal policy back to the forefront, with economists and policy makers struggling to reach a consensus on highly political issues like tax rates and government spending. At the heart of the debate are fiscal multipliers, whose size and sensitivity determine the power of such policies to influence economic growth. Fiscal Policy after the Financial Crisis focuses on the effects of fiscal stimuli and increased government spending, with contributions that consider the measurement of the multiplier effect and its size. In the face of uncertainty over the sustainability of recent economic policies, further contributions to this volume discuss the merits of alternate means of debt reduction through decreased government spending or increased taxes. A final section examines how the short-term political forces driving fiscal policy might be balanced with aspects of the long-term planning governing monetary policy. A direct intervention in timely debates, Fiscal Policy after the Financial Crisis offers invaluable insights about various responses to the recent financial crisis.

Download or read book Consumption and Fiscal Policies written by Giorgio Rodano and published by . This book was released on 2001 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Dynamics of Devaluation and Equivalent Fiscal Policies for a Small Open Economy written by International Monetary Fund and published by International Monetary Fund. This book was released on 1989-01-01 with total page 33 pages. Available in PDF, EPUB and Kindle. Book excerpt: In pursuing a steady-state reserve target, policymakers in small open economies can resort to devaluation or to temporary increases in public saving. This paper contrasts the dynamic implications of these alternative policies in a model with optimizing agents who possess perfect foresight. In general, the private sector cannot be insulated from the effects of the government’s reserve-accumulation policies. The dynamic effects of devaluation depend on the fiscal policy rule in effect. In contrast to devaluation, the “equivalent” fiscal policies imply discontinuities in private consumption and temporary tax increases may cause key macroeconomic variables to overshoot their steady-state values.

Download or read book The Effectiveness of Fiscal Policy in Stimulating Economic Activity written by Richard Hemming and published by International Monetary Fund. This book was released on 2002-12 with total page 62 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper reviews the theoretical and empirical literature on the effectiveness of fiscal policy. The focus is on the size of fiscal multipliers, and on the possibility that multipliers can turn negative (i.e., that fiscal contractions can be expansionary). The paper concludes that fiscal multipliers are overwhelmingly positive but small. However, there is some evidence of negative fiscal multipliers.

Download or read book Understanding the Effects of Government Spending on Consumption written by Jordi Galí and published by . This book was released on 2005 with total page 72 pages. Available in PDF, EPUB and Kindle. Book excerpt: Recent evidence suggests that consumption rises in response to an increase in government spending. That finding 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 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.

Download or read book The Economics of Public Finance written by Alan S. Blinder and published by Atlantic Publishers & Distri. This book was released on 1974 with total page 435 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book The Impact on Consumption and Saving of Current and Future Fiscal Policies written by Katherine Grace Carman and published by . This book was released on 2003 with total page 30 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper uses ESPlannerTM -- a life-cycle, financial planning model -- to investigate the potential impact of alternative fiscal policies on current consumption and saving. Studies to date have examined the response of current consumption to tax-induced temporary and permanent income changes. To our knowledge however, no study has directly examined whether consumption smoothing is actually feasible. ESPlanner's saving and life insurance recommendations generate the smoothest possible survival-state contingent lifetime consumption path for the household without putting it into debt. Such consumption smoothing is predicted by economic theory and appears to accord closely, on average, with actual behavior. By running households through ESPlanner based on current policy as well as on alternative fiscal policies, one can easily compare the program's consumption response to hypothetical tax and transfer policy changes and assess the degree to which borrowing constraints may be playing a role in determining the size of those responses. The households used in our analysis are drawn from the Federal Reserve's 1995 Survey of Consumer Finances. This data set provides detailed information on household earnings, assets, housing, demographics, and retirement plans -- all of which is used by ESPlanner in formulating its recommendations. The policies we consider are tax hikes, tax cuts, social security benefit cuts, and the elimination of tax-deferred saving. Our analysis distinguishes between immediate and future policy changes as well as between permanent and temporary ones. Our results are influenced by the fact that a majority 57 percent of our sample of households, many of which are young, is borrowing-constrained and, thus, more responsive to current than future policy changes no matter how long their duration. The results are also very sensitive to the particular policy being enacted. Income tax changes, for example, have little effect on the consumption/saving of low-income households for the simple

Download or read book Policy and Choice written by William J. Congdon and published by Brookings Institution Press. This book was released on 2011-04-01 with total page 260 pages. Available in PDF, EPUB and Kindle. Book excerpt: Traditional public finance provides a powerful framework for policy analysis, but it relies on a model of human behavior that the new science of behavioral economics increasingly calls into question. In Policy and Choice economists William Congdon, Jeffrey Kling, and Sendhil Mullainathan argue that public finance not only can incorporate many lessons of behavioral economics but also can serve as a solid foundation from which to apply insights from psychology to questions of economic policy. The authors revisit the core questions of public finance, armed with a richer perspective on human behavior. They do not merely apply findings from psychology to specific economic problems; instead, they explore how psychological factors actually reshape core concepts in public finance such as moral hazard, deadweight loss, and incentives. Part one sets the stage for integrating behavioral economics into public finance by interpreting the evidence from psychology and developing a framework for applying it to questions in public finance. In part two, the authors apply that framework to specific topics in public finance, including social insurance, externalities and public goods, income support and redistribution, and taxation. In doing so, the authors build a unified analytical approach that encompasses both traditional policy levers, such as taxes and subsidies, and more psychologically informed instruments. The net result of this innovative approach is a fully behavioral public finance, an integration of psychology and the economics of the public sector that is explicit, systematic, rigorous, and realistic.

Download or read book The households effects of government consumption written by Francesco Giavazzi and published by . This book was released on 2012 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper provides new evidence on the effects of fiscal policy by studying, using household-level data, how households respond to shifts in government spending. Our identification strategy allows us to control for time-specific aggregate effects, such as the stance of monetary policy or the U.S.-wide business cycle. However, it potentially prevents us from estimating the wealth effects associated with a shift in spending. We find significant heterogeneity in households' response to a spending shock; the effects appear vary over time depending, among other factors, on the state of business cycle and, at a lower frequency, on the composition of employment (such as the share of workers in part-time jobs). Shifts in spending could also have important distributional effects that are lost when estimating an aggregate multiplier. Heads of households working relatively few (weekly) hours, for instance, suffer from a spending shock of the type we analyzed: their consumption falls, their hours increase and their real wages fall.

Download or read book Fiscal Impulses and Their Fiscal Impact written by Sheetal K. Chand and published by International Monetary Fund. This book was released on 1992-05 with total page 26 pages. Available in PDF, EPUB and Kindle. Book excerpt: Fiscal impulse measures are used in the WEO and elsewhere to indicate the changing impact of the budget on the economy. Such measures are intended to provide more accurate indications of whether the budget is becoming more or less expansionary than would just observing moments in the actual budget balance. However, they have been criticized for lacking an analytical rationale. This paper uses a simple framework to show that the fiscal impulse measure can be analytically derived. While this removes one source of criticism, the measure, nevertheless, should be used carefully when making inferences of fiscal impact.

Download or read book Understanding the Effects of Fiscal Policy written by Gillian Brunet and published by . This book was released on 2017 with total page 117 pages. Available in PDF, EPUB and Kindle. Book excerpt: A key question in macroeconomics is the government's ability to stimulate economic activity through expansionary fiscal policy. How much economic activity results when the government increases spending by one dollar, and how does the economic and institutional context affect the answer to that question? This dissertation uses a variety of empirical techniques to explore aspects of this question using historical data on U.S. military spending. In chapter one I use state-level variation in war production spending to measure the fiscal multiplier during World War II, and examine how features of the wartime economy influenced the size of the fiscal multiplier. Chapter two focuses on how the measurement of government spending influences the estimated size of the multiplier. I introduce a new time series measure of aggregate defense spending. In chapter three I return to World War II, but this time examine the effects of wartime military spending on the post-war economy, establishing causal evidence for its role in driving the immediate post-war boom. In chapter one I use war production spending to quantify the idiosyncratic factors affecting estimates of the fiscal multiplier during World War II. World War II is often viewed as a quintessential example of government spending stimulating the economy, and is interesting both because it was such a significant economic event and because it strongly influences estimates of the multiplier whenever it is included in the sample. Newly digitized war supply contract data allow me to construct state-level panel data on U.S. spending for 1940-45 and examine state-level outcomes. Using state-level variation I estimate a relative multiplier of 0.25 to 0.3, depending on the estimation approach. This implies an aggregate multiplier of roughly 0.3 to 0.4 given wartime economic conditions. I find small employment effects: an additional job-year is associated with $165,000 to $255,000 of spending (in 2015 dollars), also depending on the estimation approach. I also find evidence that the effects of stimulus were systematically larger in states that had lower employment levels pre-war. To explain why the stimulative effects of war spending were so small, I look for guidance from the historical narrative. I show that unique features of the wartime economy significantly reduced the stimulative impact of wartime spending. Conversion from civilian manufacturing to war production reduced the initial stimulus from war production. At least 75 percent of the income generated by war spending went into increased saving and income taxes, implying that the add-on effects from increased consumption were minimal in the short run. Chapter two focuses on how the measurement of government spending influences the estimated fiscal multiplier. Economists have previously focused on measuring shocks to expectations rather than the measurement of government spending itself. My approach is driven by the observation that government spending is a long and complex process. Specifically, I introduce an alternative measure of government spending, called budget authority, which uses authorizations to measure the government's commitment to spend. Budget authority is established annually as part of the congressional budget process, and is readily available from 1976 onward. I use historical budget publications to construct defense budget authority for 1938 to 1975, extending the available data backwards by several crucial decades. Using annualized data (for purposes of comparison) to estimate the aggregate fiscal multiplier using shocks to defense spending, budget authority produces similar point estimates to the traditional NIPA measure, but much more precisely estimated. Budget authority is conceptually different from the best-known measure of shocks to anticipated defense spending, Ramey's narrative measure, particularly in how it measures shocks to expectations and how it treats uncertainty. Budget authority implies an aggregate fiscal multiplier of 0.8, while Ramey's narrative measure implies a much smaller fiscal multiplier, around 0.1. Budget authority shows consumption responses to spending more clearly than other available measures, and also picks up strong investment responses over a one-year time horizon. Ramey's narrative measure shows significant investment responses over all time horizons up to three years. While shocks to all three measures predict strong responses in total government spending, it appears that both budget authority and Ramey's measure understate the response of government spending due to timing differences between those measures and NIPA. The definition of spending mostly closely aligned to national accounting is subtly different from the definition that is most relevant for measuring the stimulative effect of government spending. Thus using the NIPA definition of spending creates a downward bias in measuring the fiscal multiplier. A fourth measure of spending, budget outlays, allows me to estimate a lower bound for the magnitude of this bias. When this bias is corrected, budget authority implies an aggregate fiscal multiplier of 1.3 to 1.4, and potentially as large as 1.4 to 1.6. Chapter three examines the influence of World War II spending in the U.S. on household consumption and savings in the immediate post-war years (1946-1949). Chapter three uses geographic variation in war spending to measure the effects of World War II spending on household consumption and savings behavior after the war ended and rationing was relaxed. I find that compared to households in locations receiving less war spending, similar households in locations which received more war spending were significantly more likely to purchase both cars and houses in the immediate post-war years. These households also had higher liquid asset holdings and, conversely, higher total debt. With the exception of debt, all of these effects were stronger for households headed by an individual age 45-64, which was the age cohort most likely to have worked in war production.

Download or read book Disease Control Priorities in Developing Countries written by Dean T. Jamison and published by World Bank Publications. This book was released on 2006-04-02 with total page 1449 pages. Available in PDF, EPUB and Kindle. Book excerpt: Based on careful analysis of burden of disease and the costs ofinterventions, this second edition of 'Disease Control Priorities in Developing Countries, 2nd edition' highlights achievable priorities; measures progresstoward providing efficient, equitable care; promotes cost-effectiveinterventions to targeted populations; and encourages integrated effortsto optimize health. Nearly 500 experts - scientists, epidemiologists, health economists,academicians, and public health practitioners - from around the worldcontributed to the data sources and methodologies, and identifiedchallenges and priorities, resulting in this integrated, comprehensivereference volume on the state of health in developing countries.