Université de Lausanne
Ecole des HEC
Département d'économétrie et d'économie politique
Tuesday February 24, 2009, 13:30
Extranef, Dorigny, room 126
Valerio
ERCOLANI
(University Bocconi, Milano, Italy)
Macro Evidence from Micro Data
Abstract
We estimate the effect of different government consumption shocks on private consumption. First, we build a unique panel
dataset which links household's private consumption to the government consumption of the region where the household lives,
for Italy. Then we use regional variability of government consumption and measure its direct effect on individual consumption
for different categories of government expenditures. We find that individual's consumption expenditure increases as government
consumption increases in the region. This positive relation is driven by publicly provided private goods (e.g. education, health).
Health care government consumption has the strongest impact on households' consumption. The results can be interpreted in the
light of complementarity between goods. Finally, we use our estimates from micro data to calibrate an otherwise standard RBC
model. We find that government consumption shocks are able to generate a positive response for private consumption, even
considering wealth and general equilibrium effects in a dynamic framework with fully flexible prices.
Web site of the seminar (with paper online): http://www.hec.unil.ch/deep/evenements-english/e-sem-all-2008-09.htm