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Shiou-Yen Chu and Brian Chi-ang Lin
''Wagner-Keynesian Nexus in a DSGE Model''
( 2021, Vol. 41 No.4 )
This research integrates two longstanding controversies, Wagner's law and Keynesian hypothesis, into a dynamic stochastic general equilibrium (DSGE) model. The former perceives that government spending endogenously varies with output growth, while the latter considers that government spending exogenously triggers economic growth. We show that these two standpoints will gradually coincide as private consumption and public expenditure become more substitutable.
Keywords: Government spending, Wagner's law, Nominal rigidity
JEL: E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General
H3 - Fiscal Policies and Behavior of Economic Agents: General
Manuscript Received : Mar 17 2021 Manuscript Accepted : Dec 29 2021

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