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Journal Articles Journal of Money, Credit and Banking Year : 2009

Nonseparable Preferences, Fiscal Policy Puzzles, and Inferior Goods

Abstract

Nonseparable preferences over consumption and leisure can generate an increase in private consumption in response to government spending, as found in the data, in a frictionless business cycle model. However, the conditions on preferences required for these result to obtain hold if and only if the consumption good is inferior. Similarly, positive co-movement of consumption and hours worked occurs if and only if either consumption or leisure is inferior.

Dates and versions

hal-00622869 , version 1 (12-09-2011)

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Florin Bilbiie. Nonseparable Preferences, Fiscal Policy Puzzles, and Inferior Goods. Journal of Money, Credit and Banking, 2009, 41 (2-3), pp.443-450. ⟨10.1111/j.1538-4616.2009.00213.x⟩. ⟨hal-00622869⟩
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