Big G

doi:10.1086/730426

Big G

2024-10-01

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DOI：10.1086/730426

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Abstract

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Big G typically refers to aggregate government spending on a homogeneous good. We confront this notion with five facts for the universe of federal purchases. First, they are volatile and account for the largest part of the short-run variation in total spending. Second, the origin of their variation is granular. Third, purchases are subject to procurement and bidding. Fourth, they are concentrated in long-term contracts. Fifth, their composition is biased toward sectors in which private sector prices are sticky. We develop a two-sector New Keynesian model consistent with these facts and find where the government spends is key for aggregate effects.

Keywords:

FISCAL-POLICY

SPENDING EVIDENCE

OPTIMAL MONETARY

MULTIPLIERS

STIMULUS

RENEGOTIATION

INVESTMENT

CONTRACTS

ORIGINS

Big G

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