TY  - JOUR
AU  - Edelberg,Wendy
AU  - Eichenbaum,Martin
AU  - Fisher,Jonas D.M.
TI  - Understanding the Effects of a Shock to Government Purchases
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 6737
PY  - 1998
Y2  - September 1998
UR  - http://www.nber.org/papers/w6737
L1  - http://www.nber.org/papers/w6737.pdf
N1  - Author contact info:
Wendy Edelberg
Congressional Budget Office
E-Mail: wendy.edelberg@cbo.gov

Martin S. Eichenbaum
Department of Economics
Northwestern University
2003 Sheridan Road
Evanston, IL  60208
Tel: 847/491-8232
Fax: 847/491-7001
E-Mail: eich@northwestern.edu

Jonas Fisher
Economic Research Department
Federal Reserve Bank of Chicago
230 South LaSalle Street
Chicago, IL  60604
Tel: 312/312-8177
Fax: NA
E-Mail: jfisher@frbchi.org
AB  - This paper investigates the consequences of an exogenous increase in U.S. government purchases.  We find that in response to such a shock, employment, output, and nonresidential investment rise, while real wages, residential investment, and consumption expenditures fall.  The paper argues that a simple variant of the neoclassical model which distinguishes between nonresidential and residential investment is consistent with this evidence.
ER  -