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.
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Contributor : Florin Bilbiie <>
Submitted on : Monday, September 12, 2011 - 10:05:13 PM
Last modification on : Tuesday, January 30, 2018 - 5:50:02 PM

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

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