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The Precautionary Saving Effect of Government Consumption (30/10/2018)

PAVONI NICOLA (joint with Valerio Ercolani)
BE Journal of Macroeconomics (Frontiers)

We study a largely neglected channel through which government expenditures can boost private consumption. We set up a dynamic model in which households are subject to health shocks. We take the model to the data and estimate a negative impact of public health care on household consumption dispersion, wealth and saving. According to our model, this result is explained by a change in the level of precautionary saving, with public health care acting as a form of consumption insurance. We compute the implied consumption multipliers by simulating the typical government consumption shock within a calibrated general equilibrium version of our model, with flexible prices. The impact consumption multiplier generated by the decrease in the level of precautionary saving is positive and sizable. When we include the effect of taxation, the sign of the impact multiplier depends on a few features of the model, such as the persistence of the health shocks. The long-run cumulative multiplier is negative across all calibrations.

 



  • The Precautionary Saving Effect of Government Consumption (756 Kb)
  • Last change 15/11/2018

    The Dual Approach to Recursive Optimization: Theory and Examples (2018)

    PAVONI NICOLA (Joint with C. Sleet and M. Messner)
    Econometrica

    Last change 15/11/2018

    The Evolution of Belief Ambiguity During the Process of High School Choice (2017)

    PAVONI NICOLA (joint with Pamela Giustinelli)
    Review of Economic Dynamics

    Last change 15/11/2018

    Intergenerational Disagreement and Optimal Taxation of Parental Transfers (2016)

    PAVONI NICOLA (joint with Hakki Yazici)
    Review of Economic Studies

    Last change 15/11/2018

    The Design of `Soft' Welfare Programs (20/03/2016)

    PAVONI NICOLA (joint with O. Setty and G. Violante)
    Review of Economic Dynamics

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  • Last change 15/11/2018

    Optimal Income Taxation when Asset Taxation is Limited (05/03/2016)

    PAVONI NICOLA (joint with A. Ábráham and S. Koehne)
    Journal of Public Economics,

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  • Last change 15/11/2018

    Optimal Life-cycle Capital Taxation under Self-Control Problems (forthcoming)

    PAVONI NICOLA (joint with H. Yazici)
    Economic Journal

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  • Last change 15/11/2018

    Recursive Methods for Incentive Problems (10/2012)

    PAVONI NICOLA with M. Messner & C. Sleet
    Review of Economic Dynamics 15(4), October: 501-525

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  • Last change 15/11/2018

    Risk Sharing in Private Information Models with Asset Accumulation: Explaining the Excess Smoothness of Consumption (07/2011)

    PAVONI NICOLA with O. Attanasio
    Econometrica 79(4), July: 1027-1068

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  • Last change 28/11/2012

    On the First-order Approach in Principal-Agent Models with Hidden Borrowing and Lending (07/2011)

    PAVONI NICOLA with A. Abraham and S. Koehne
    Journal of Economic Theory 146(4), July: 1331-1361

    Last change 15/11/2018

    Optimal Unemplyment Insurance with Human Capital Depreciation and Duration Dependence (05/2009)

    PAVONI NICOLA
    Internation Economic Review, May:323-362

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  • Last change 15/11/2018

    Efficient Allocation with Moral Hazard and Hidden Borrowing and Lending (10/2008)

    PAVONI NICOLA with A. Abraham
    the Review for Economic Dynamics, 11, October:781-803

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  • Last change 21/11/2011

    Social Preferences, Skill Segregation and Wage Dynamics (01/2008)

    PAVONI NICOLA with A. Cabrales and A. Calvo-Armengol
    Review of Economic Studies, 75, January: 65-98

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  • Last change 15/11/2018

    Optimal Welfare-to-Work Programs (01/2007)

    PAVONI NICOLA with G. Violante
    Review of Economic Studies, 74, january: 238-318

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  • Last change 15/11/2018

    On Optimal Unemployment Compensation (2007)

    PAVONI NICOLA
    Journal of Monetary Economics, 54: 1612-1630

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  • Last change 21/11/2011

    The Efficient Allocation of Consumption under Moral Hazard and Hidden Access to the Credit Market (2005)

    PAVONI NICOLA with A. Abraham
    Journal of the European Economic Association

    Last change 15/11/2018

    Optimal Income Taxation and Hidden Borrowing and Lending: The First-Order Approach in Two Periods (2008)

    PAVONI NICOLA with A. Abraham
    Carlo Alberto Notebooks, No. 102

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  • Last change 21/11/2011

    On the recursive Saddle Point Method (2004)

    PAVONI NICOLA with Matthias Messner
    IGIER-Bocconi University Workig Paper no. 255

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  • Last change 21/11/2011

    Innefficiencies in Dynamic Family Decisions: An incomplete Contracts Approach to Labor Supply (1998)

    PAVONI NICOLA
    Center of Household, Income, Labor ad Demographic Economics

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  • Last change 21/11/2011



    Last updated September 08, 2011