Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
7349445 | Economics Letters | 2018 | 5 Pages |
Abstract
We show that time-to-build, which creates a time gap between government spending and the accumulation of public goods, is an important element that weakens the effectiveness of fiscal stimulus. In the environment where private consumption and public goods are Edgeworth complements, adding time-to-build to the model delays the timing of utility-enhancing effects of an increase in government expenditure, leading households to shift consumption from today to the future. The expansionary effect of government spending is hence dampened, which contrasts existing studies with Edgeworth complementarity between private and public consumption.
Related Topics
Social Sciences and Humanities
Economics, Econometrics and Finance
Economics and Econometrics
Authors
Jingchao Li, Rong Li,