TY - JOUR
T1 - Housework and fiscal expansions
AU - Gnocchi, Stefano
AU - Hauser, Daniela
AU - Pappa, Evi
PY - 2016/5/1
Y1 - 2016/5/1
N2 - © 2016. In an otherwise-standard business cycle model with housework, calibrated consistently with data on time use, we discipline complementarity between consumption and hours worked and relate its strength to the size of fiscal multipliers. Evidence on the substitutability between home and market goods confirms that complementarity is an empirically relevant driver of fiscal multipliers. However, in a housework model substantial complementarity can be generated without imposing a low wealth effect, which contradicts the microeconomic evidence. Also, explicitly modeling housework matters for assessing the welfare effects of government spending, which are understated by theories that neglect substitutability between home-produced and market goods.
AB - © 2016. In an otherwise-standard business cycle model with housework, calibrated consistently with data on time use, we discipline complementarity between consumption and hours worked and relate its strength to the size of fiscal multipliers. Evidence on the substitutability between home and market goods confirms that complementarity is an empirically relevant driver of fiscal multipliers. However, in a housework model substantial complementarity can be generated without imposing a low wealth effect, which contradicts the microeconomic evidence. Also, explicitly modeling housework matters for assessing the welfare effects of government spending, which are understated by theories that neglect substitutability between home-produced and market goods.
KW - Government expenditure shocks
KW - Home production
U2 - 10.1016/j.jmoneco.2016.04.003
DO - 10.1016/j.jmoneco.2016.04.003
M3 - Article
SN - 0304-3932
VL - 79
SP - 94
EP - 108
JO - Journal of Monetary Economics
JF - Journal of Monetary Economics
ER -