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Coverphoto: uni_com on photocase.comTrend Growth and the Dynamic Effects of

By  and Mewael F. Tesfaselassie and Mewael F. Tesfaselassie and Mewael F. Tesfaselassie and Mewael F. Tesfaselassie


The paper studies the macroeconomic effects of government spending shocks in an economy characterized by positive trend growth. It shows that the lower is the trend growth rate the less inflationary are government spending shocks and vice versa. Moreover, on impact output is higher but exhibits less persistence the lower is trend growth, an effect that also characterizes consumption and the fiscal multiplier given that consumption and labor are somewhat complementary

Topics: trend growth, government spending, fiscal multiplier
Year: 2011
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