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Working Paper Series
Understanding the Effects of a Shock to
Government Purchases
Wendy Edelberg, Martin Eichenbaum and
Jonas D. M. Fisher
Working Papers Series
Research Department
(WP-98-7)
Federal Reserve Bank of Chicago
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qglqj wkdw uhvlghqwldo lqyhvwphqw idoov zkloh qrquhvlghqwldo lqyhvwphqw ulvhv lq uhvsrqvh wr dq
57
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d irup ri lqyhvwphqw lq wkh vwrfn ri gxudeoh frqvxpswlrq jrrgv1
Zkloh vxffhvvixo rq d ydulhw| ri glphqvlrqv/ rxu prgho vx huv iurp lpsruwdqw vkruwfrplqjv1
Iluvw/ wkh prgho lqkhulwv wkh zhoo nqrzq lqdelolw| ri vlpsoh frpsohwh pdunhw uhsuhvhqwdwlyh frq0
vxphu prghov wr dffrxqw iru wkh revhuyhg wlph vhulhv ehkdylru ri dvvhw uhwxuqv1 Wkhvh idloxuhv
pdqlihvw wkhpvhoyhv khuh lq wkh uhvsrqvh ri wkh uhdo lqwhuhvw udwh wr d vkrfn wr jryhuqphqw sxu0
fkdvhv1 Urxjko| vshdnlqj/ wkh prgho suhglfwv wkdw wkh uhdo lqwhuhvw udwh lv xqd hfwhg e| d vkrfn
wr jryhuqphqw sxufkdvhv1 Vhfrqg/ wkh prgho edvhg g|qdplf uhvsrqvh ixqfwlrqv ri uhvlghqwldo
dqg qrq uhvlghqwldo lqyhvwphqw gr qrw h{klelw wkh shuvlvwhqw/ kxps vkdshg sdwwhuqv wkdw fkdu0
dfwhul}h rxu hvwlpdwhg uhvsrqvh ixqfwlrqv1 Wkh vhfrqg vkruwfrplqj lv uhplqlvfhqw ri Juhhqzrrg
dqg Khufrzlw}*v +4<<4, qglqj wkdw Uhdo Exvlqhvv F|foh prghov fdqqrw dffrxqw iru vrph nh|
ihdwxuhv ri wkh g|qdplf sdwkv ri krxvhkrog dqg exvlqhvv fdslwdo lq uhvsrqvh wr dq djjuhjdwh
whfkqrorj| vkrfn1 Lw zrxog eh lqwhuhvwlqj wr hqulfk rxu prgho e| doorzlqj iru gl huhqwldo frvwv
ri dgmxvwlqj uhvlghqwldo dqg qrquhvlghqwldo lqyhvwphqw1 Lw lv srvvleoh/ exw idu iurp fhuwdlq/ wkdw
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Zh frqfoxgh e| qrwlqj d srwhqwldoo| lpsruwdqw olplwdwlrq ri rxu dqdo|vlv1 Wkhuh lv fohdu
hylghqfh wkdw dyhudjh pdujlqdo wd{ udwhv rq lqfrph urvh diwhu wkh rqvhw ri wkh Udph|0Vkdslur
hslvrghv +vhh Iljxuh ;,1 Krzhyhu zh hydoxdwhg rxu prgho xqghu wkh dvvxpswlrq wkdw wd{hv duh
oxps vxp lq qdwxuh1 Doorzlqj iru d ulvh lq pdujlqdo wd{ udwhv frxog yhu| zhoo d hfw wkh hpslulfdo
shuirupdqfh ri rxu prgho1 Wklv lv ehfdxvh kljkhu wd{ udwhv zrxog gdpshq wkh srvlwlyh uhvsrqvh
ri hpsor|phqw dqg rxwsxw dvvrfldwhg zlwk lqfuhdvhv lq jryhuqphqw sxufkdvhv +vhh iru h{dpsoh
Ed{whu dqg Nlqj +4<<6,,1 Dq lpsruwdqw vhw ri wdvnv wkdw zh ohdyh wr ixwxuh uhvhdufk duh +l,
qglqj rxw zklfk wd{hv/ h1j1 oderu yhuvxv fdslwdo lqfrph wd{hv/ urvh diwhu wkh Udph|0Vkdslur
hslvrghv/ +ll, lqfrusrudwlqj wkhvh lqwr rxu prgho/ dqg +lll, dvvhvvlqj wkh qhw h hfw ri dq lqfuhdvh
lq jryhuqphqw sxufkdvhv zkhq r vhwwlqj wd{ fkdqjhv duh wdnhq lqwr dffrxqw1
58
Gdwd Dsshqgl{
Rxu gdwd duh iurp irxu pdlq vrxufhv1 Ehorz zh olvw wkh vhulhv zklfk fruuhvsrqg wr hdfk
ri wkhvh vrxufhv1 Doo vhulhv duh vhdvrqdoo| dgmxvwhg h{fhsw iru lqwhuhvw udwhv1 Prvw ri wkhvh
vhulhv zhuh rewdlqhg e| xv iurp wkh Ihghudo Uhvhuyh Erdug*v pdfurhfrqrplf gdwdedvh1 Zkhuh
srvvleoh zh surylgh wkh pqhprqlf iru wkh vdph vhulhv iurp wkh frpphufldoo| dydlodeoh GUL
EDVLF Hfrqrplfv Gdwdedvh1
41 Exuhdx ri Hfrqrplf Dqdo|vlv1 JGS +JGST,/ Ghihqvh vshqglqj +JJIHT,/ Jryhuq0
phqw sxufkdvhv +Ghihqvh vshqglqj soxv Ihghudo/ Vwdwh dqg Orfdo frqvxpswlrq h{shq0
glwxuhv, +JJIHT.JJRFHT.JJVFST,/ Sulydwh JGS +JGSJryhuqphqw sxufkdvhv,/
Qrqgxudeoh jrrgv dqg vhuylfhv frqvxpswlrq h{shqglwxuhv +JFQT.JFVT,/ Gxudeoh jrrgv
frqvxpswlrq h{shqglwxuhv +JFGT,/ Wrwdo frqvxpswlrq +wkh vxp ri qrqgxudeohv/ vhuylfhv
dqg gxudeohv h{shqglwxuhv, +JFT,/ Uhvlghqwldo lqyhvwphqw +JLUT,/ Qrquhvlghqwldo lq0
yhvwphqw +JLUT,/ Qrquhvlghqwldo vwuxfwxuhv lqyhvwphqw/ Surgxfhu gxudeoh htxlsphqw lq0
yhvwphqw/ Lqirupdwlrq surfhvvlqj htxlsphqw lqyhvwphqw/ Lqgxvwuldo htxlsphqw lqyhvwphqw/
Wudqvsruwdwlrq htxlsphqw lqyhvwphqw/ JGS gh dwru +JGS2JGST,1 Wkh txdqwlw| vhulhv
duh doo lq xqlwv ri 4<<5 fkdlq0zhljkwhg grooduv zlwk wkh h{fhswlrq ri wkh frpsrqhqwv ri
qrquhvlghqwldo lqyhvwphqw zklfk duh wkh fkdlq0zhljkwhg txdqwlw| lqgh{hv1 Wkh odwwhu zhuh
grzqordghg gluhfwo| iurp zzz1vwdw0xvd1jry1
51 Exuhdx ri Oderu Vwdwlvwlfv +EOV,1
Hpsor|phqw Wrwdo sulydwh +OS,/ Pdqxidfwxulqj +OSHP,/ Frqvwuxfwlrq +OSFF,/
Gxudeoh pdqxidfwxulqj +OSHG,/ Qrqgxudeoh pdqxidfwxulqj +OSHQ,/ Ihghudo jry0
huqphqw +OSJRYI,
Frpshqvdwlrq Uhdo frpshqvdwlrq shu krxu lq exvlqhvv vhfwru +OEFS:,/ Uhdo frp0
shqvdwlrq shu krxu lq pdqxidfwxulqj vhfwru +OFSP:,1 Qrwh wkdw wkhvh frpshqvdwlrq
vhulhv duh wkh qrplqdo frpshqvdwlrq vhulhv gh dwhg e| wkh EOV xvlqj wkh frqvxphu
sulfh lqgh{ iru doo xuedq frqvxphuv1 Zh rewdlqhg wkh dowhuqdwlyh uhdo frpshqvdwlrq
vhulhv xvhg lq rxu dqdo|vlv e| lq dwlqj wkh EOV frpshqvdwlrq vhulhv e| wkh FSL dqg
wkhq gh dwlqj e| wkh lqglfdwhg sulfh vhulhv1
59
Zdjhv Pdqxidfwxulqj +OHKP,/ Gxudeoh jrrgv pdqxidfwxulqj +OH9KPG/ vhdvrq0
doo| dgmxvwhg xvlqj wkh Fhqvxv [044 surfhgxuh,/ Qrqgxudeoh jrrgv pdqxidfwxulqj
+OH9KPQ/ vhdvrqdoo| dgmxvwhg xvlqj wkh Fhqvxv [044 surfhgxuh,/ Zkrohvdoh Wudgh
+OHKWZ,/ Frqvwuxfwlrq +OHKFF,
Sulfhv Frqvxphu sulfh lqgh{ iru doo xuedq frqvxphuv +SXQHZ,/ Surgxfhu sulfh
lqgh{ iru wkh pdqxidfwxulqj vhfwru +SZP,/ Sulydwh exvlqhvv gh dwru +OEJGS,/ Sur0
gxfhu sulfh lqgh{ iru fuxgh ixho lq pdqxidfwxulqj lqgxvwulhv +SZ4643,1
61 Erdug ri Jryhuqruv ri wkh Ihghudo Uhvhuyh V|vwhp1 Qhw 6 prqwk Wuhdvxu| Eloo vhf0
rqgdu| pdunhw lqwhuhvw udwh +I\JP6,/ P4 +IP4,/ Lqgxvwuldo Surgxfwlrq Pdqxidfwxu0
lqj +LSPIJ,/ Frqvxphu Jrrgv +LSF,/ Gxudeoh Pdqxidfwxulqj +LSG,/ Gxudeoh Frqvxphu
Jrrgv +LSFG,/ Qrqgxudeoh Pdqxidfwxulqj +LSQ,/ Qrqgxudeoh Frqvxphu Jrrgv +LSFQ,1
71 Urehuw Eolvv/ Ihghudo Uhvhuyh Edqn ri Dwodqwd1 ]hur frxsrq |lhogv rq 6 prqwk/ 4 |hdu
dqg 5 |hdu wuhdvxu| vhfxulwlhv1
5:
Uhihuhqfhv
Dl|djdul/ U1/ Fkulvwldqr/ O1 dqg P1 Hlfkhqedxp/ Wkh Rxwsxw/ Hpsor|phqw dqg Lqwhuhvw Udwh
H hfwv ri Jryhuqphqw Frqvxpswlrq/ Mrxuqdo ri Prqhwdu| Hfrqrplfv 63 +4<<5,/ :60;91
Ed{whu/ P1 dqg U1J1 Nlqj/ Ilvfdo Srolf| lq Jhqhudo Htxloleulxp/ Dphulfdq Hfrqrplf Uhylhz
;6 +4<<6,/ 64806671
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Fkdqjhv lq Jryhuqphqw Vshqglqj dqg Wd{hv rq Rxwsxw/ pdqxvfulsw/ PLW/ 4<<;1
Exuqvlgh/ F1 dqg P1 Hlfkhqedxp/ Idfwru Krduglqj dqg wkh Sursdjdwlrq ri Exvlqhvv F|foh
Vkrfnv/ Dphulfdq Hfrqrplf Uhylhz ;9 +4<<9,/ 4487044:71
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Ghpdqg rq Hfrqrplf Dfwlylw| e| M1 Urwhpehuj dqg P1 Zrrgirug/ QEHU Hfrqrplf
Ioxfwxdwlrqv Phhwlqjv/ Sdor Dowr/ Fdoliruqld/ 4<<31
Fkulvwldqr/ O1M1/ Vroylqj G|qdplf Htxloleulxp Prghov e| d Phwkrg ri Xqghwhuplqhg Frh!0
flhqwv/ QEHU Whfkqlfdo Zrunlqj Sdshu/ Qr1 558/ 4<<;
Fkulvwldqr/ O1M1 dqg P1 Hlfkhqedxp/ Fxuuhqw Uhdo Exvlqhvv F|foh Wkhrulhv dqg Djjuhjdwh
Oderu Pdunhw Ioxfwxdwlrqv/ Dphulfdq Hfrqrplf Uhylhz ;5 +4<<5,/ 76307831
Fkulvwldqr/ O1M1/ Hlfkhqedxp/ P1 dqg F1 Hydqv/ Prqhwdu| Srolf| Vkrfnv= Zkdw Kdyh Zh
Ohduqhg dqg wr Zkdw HqgB/ iruwkfrplqj/ Kdqgerrn ri Prqhwdu| Hfrqrplfv/ Plfkdho
Zrrgirug dqg Mrkq Wd|oru hgv/ 4<<:1
Fkulvwldqr/ O1M1/ Hlfkhqedxp/ P1 dqg F1 Hydqv/ Prghoolqj Prqh|/ QEHU Zrunlqj Sdshu
Qr1 96:4/ 4<<;1
Ghyhuhx{/ P1E1/ Khdg/ D1F1 dqg P1 Odskdp/ Prqrsrolvwlf Frpshwlwlrq/ Lqfuhdvlqj Uhwxuqv/
dqg wkh H hfwv ri Jryhuqphqw Vshqglqj/ Mrxuqdo ri Prqh|/ Fuhglw dqg Edqnlqj 5;
+4<<9,/ 566 0 5871
5;
Hlfkhqedxp/ P1/ Frpphqw rq cFrvwo| Fdslwdo Uhdoorfdwlrq dqg wkh H hfwv ri Jryhuqphqw
Vshqglqj* e| Ydohulh D1 Udph| dqg Pdwwkhz G1 Vkdslur/ iruwkfrplqj Fduqhjlh Urfkhvwhu
Frqihuhqfh rq Sxeolf Srolf|/ 4<<:1
Idluolh/ U1Z1/ dqg E1G1 Ph|hu/ Wuhqgv lq Vhoi0Hpsor|phqw Dprqj Zklwh dqg Eodfn Phq=
4<4304<<3/ pdqxvfulsw/ Qruwkzhvwhuq Xqlyhuvlw|/ 4<<91
Ilvkhu/ M1G1P1 Uhodwlyh Sulfhv/ Frpsohphqwdulwlhv dqg Frpryhphqw Dprqj Frpsrqhqwv ri
Djjuhjdwh H{shqglwxuhv/ Mrxuqdo ri Prqhwdu| Hfrqrplfv 6< +4<<:,/ 77<07:71
Juhhqzrrg/ M1 dqg ]1 Khufrzlw} / Wkh Doorfdwlrq ri Fdslwdo dqg Wlph Ryhu wkh Exvlqhvv
F|foh/ Mrxuqdo ri Srolwlfdo Hfrqrp| << +4<<4,/ 44;; 0 45471
Udph|/ Y1 dqg P1 Vkdslur/ Frvwo| Fdslwdo Uhdoorfdwlrq dqg wkh H hfwv ri Jryhuqphqw Vshqg0
lqj/ iruwkfrplqj Fduqhjlh Urfkhvwhu Frqihuhqfh rq Sxeolf Srolf|/ 4<<:1
Skhodq/ F1 dqg D1 Wuhmrv/ Wkh Djjuhjdwh H hfwv ri Vhfwrudo Uhdoorfdwlrq/ pdqxvfulsw/ Qruwk0
zhvwhuq Xqlyhuvlw|/ 4<<91
Urwhpehuj/ M1 dqg P1 Zrrgirug/ Roljrsrolvwlf Sulflqj dqg wkh H hfwv ri Djjuhjdwh Ghpdqg
rq Hfrqrplf Dfwlylw|/ Mrxuqdo ri Srolwlfdo Hfrqrp| 433 +4<<5,/ 4486045<:1
5<
Iljxuh 4= Srvw Zruog Zdu LL X1V1 Ghihqvh Sxufkdvhv
Defense Spending
Billions of 1992 Dollars
450
400
350
300
250
200
150
100
1949
1959
1969
1979
1989
Share of Defense Spending in GDP
0.22
0.20
0.18
0.16
0.14
0.12
0.10
0.08
0.06
0.04
1949
1959
1969
63
1979
1989
Iljxuh 5= Uhvsrqvhv ri Jryhuqphqw Sxufkdvhv dqg Rxwsxw
Defense Spending
Government Purchases
40
17.5
35
15.0
30
12.5
25
10.0
20
7.5
15
5.0
10
2.5
5
0
0.0
-5
-2.5
0
3
6
9
12
15
0
3
Real GDP
6
9
12
15
12
15
Private GDP
5.6
4
4.8
3
4.0
2
3.2
1
2.4
0
1.6
-1
0.8
-2
0.0
-3
-0.8
-4
-1.6
-5
0
3
6
9
12
15
0
64
3
6
9
Iljxuh 6= Uhvsrqvhv ri Hpsor|phqw
Total Private
Manufacturing
12.5
12.5
10.0
10.0
7.5
7.5
5.0
5.0
2.5
2.5
0.0
0.0
-2.5
-2.5
0
3
6
9
12
15
0
Construction
3
6
9
12
15
12
15
12
15
Durable Manufacturing
12.5
12.5
10.0
10.0
7.5
7.5
5.0
5.0
2.5
2.5
0.0
0.0
-2.5
-2.5
0
3
6
9
12
15
0
Federal Government
3
6
9
Nondurable Manufacturing
12.5
12.5
10.0
10.0
7.5
7.5
5.0
5.0
2.5
2.5
0.0
0.0
-2.5
-2.5
0
3
6
9
12
15
0
65
3
6
9
Iljxuh 7= Uhvsrqvhv ri Frqvxpswlrq dqg Lqyhvwphqw
Nondurables + Services
Consumer Durables
15
15
10
10
5
5
0
0
-5
-5
-10
-10
-15
-15
-20
-20
-25
-25
0
3
6
9
12
15
0
Residential Investment
3
6
9
12
15
12
15
12
15
Nonresidential Investment
15
15
10
10
5
5
0
0
-5
-5
-10
-10
-15
-15
-20
-20
-25
-25
0
3
6
9
12
15
0
Total Consumption
3
6
9
Durables + Residential
15
15
10
10
5
5
0
0
-5
-5
-10
-10
-15
-15
-20
-20
-25
-25
0
3
6
9
12
15
0
66
3
6
9
Iljxuh 8= Uhvsrqvhv ri Gl huhqw W|shv ri Qrquhvlghqwldo Lqyhvwphqw
Nonresidential
Information Processing
20
20
15
15
10
10
5
5
0
0
-5
-5
-10
-10
-15
-15
-20
-20
0
3
6
9
12
15
0
Structures
3
6
9
12
15
12
15
12
15
Industrial Equipment
20
20
15
15
10
10
5
5
0
0
-5
-5
-10
-10
-15
-15
-20
-20
0
3
6
9
12
15
0
3
Producer Durable Equipment
6
9
Transportation
20
20
15
15
10
10
5
5
0
0
-5
-5
-10
-10
-15
-15
-20
-20
0
3
6
9
12
15
0
67
3
6
9
Iljxuh 9= Vhfwrudo Rxwsxw Uhvsrqvhv
Manufacturing IP
Consumer Goods IP
15
15
10
10
5
5
0
0
-5
-5
-10
-10
-15
-15
0
3
6
9
12
15
0
Durable Manufacturing IP
3
6
9
12
15
12
15
Durable Consumer Goods IP
15
15
10
10
5
5
0
0
-5
-5
-10
-10
-15
-15
0
3
6
9
12
15
0
Nondurable Manufacturing IP
3
6
9
Nondurable Consumer Goods IP
15
15
10
10
5
5
0
0
-5
-5
-10
-10
-15
-15
0
3
6
9
12
15
0
68
3
6
9
12
15
Iljxuh := Uhvsrqvhv ri Uhdo Oderu Frpshqvdwlrq
Compensation Private Business / CPI
Compensation Manufacturing / CPI
5
5
4
4
3
3
2
2
1
1
0
0
-1
-1
-2
-2
-3
-3
-4
-4
0
3
6
9
12
15
0
Compensation Private Business / PBUS
3
6
9
12
15
Compensation Manufacturing / PPI
5
5
4
4
3
3
2
2
1
1
0
0
-1
-1
-2
-2
-3
-3
-4
-4
0
3
6
9
12
15
0
Compensation Private Business / PGDP
3
6
9
12
15
Compensation Manufacturing / PGDP
5
5
4
4
3
3
2
2
1
1
0
0
-1
-1
-2
-2
-3
-3
-4
-4
0
3
6
9
12
15
0
69
3
6
9
12
15
Iljxuh ;= Dyhudjh Pdujlqdo Wd{ Udwhv
0.325
0.300
0.275
0.250
0.225
0.200
0.175
1947
1953
1959
1965
6:
1971
1977
1983
1989
Iljxuh <= Uhvsrqvhv ri Uhdo Zdjhv
Before Tax
After Tax
Durables Wages / CPI
Durables Wages / CPI
6
6
4
4
2
2
0
0
-2
-2
-4
-4
-6
-6
0
3
6
9
12
15
0
Nondurables Wages / CPI
3
6
9
12
15
12
15
12
15
Nondurables Wages / CPI
6
6
4
4
2
2
0
0
-2
-2
-4
-4
-6
-6
0
3
6
9
12
15
0
Wholesale Trade Wages / CPI
3
6
9
Wholesale Trade Wages / CPI
6
6
4
4
2
2
0
0
-2
-2
-4
-4
-6
-6
0
3
6
9
12
15
0
Construction Wages / CPI
3
6
9
Construction Wages / CPI
6
6
4
4
2
2
0
0
-2
-2
-4
-4
-6
-6
6;
Iljxuh 43= Uhvsrqvhv ri Gl huhqw Phdvxuhv ri Pdqxidfwxulqj Uhdo Zdjhv
Before Tax
After Tax
Manufacturing Wages / CPI
Manufacturing Wages / CPI
1.0
2
0.5
1
0.0
0
-0.5
-1
-1.0
-2
-1.5
-3
-2.0
-4
-2.5
-3.0
-5
0
3
6
9
12
15
0
Manufacturing Wages / PPI
3
6
9
12
15
12
15
Manufacturing Wages / PPI
5
4
4
2
3
2
0
1
0
-2
-1
-2
-4
-3
-4
-6
0
3
6
9
12
15
0
Manufacturing Wages / PGDP
3
6
9
Manufacturing Wages / PGDP
1.0
1.6
0.5
0.8
0.0
-0.0
-0.5
-0.8
-1.0
-1.6
-1.5
-2.4
-2.0
-3.2
0
3
6
9
12
15
0
6<
3
6
9
12
15
Iljxuh 44= Uhvsrqvhv ri Prqh|/ Sulfhv dqg Lqwhuhvw Udwhv
GDP Deflator
Nominal 3 Month Yield
Real 3 Month Yield
3
2.0
2.7
2
1.5
1.8
1.0
0.9
0.5
-0.0
0.0
-0.9
-0.5
-1.8
-1.0
-2.7
-1.5
-3.6
1
0
-1
-2
-3
-4
-2.0
0
3
6
9
12
15
-4.5
0
CPI
3
6
9
12
15
0
Nominal 1 Year Yield
2.7
6
9
12
15
12
15
12
15
Real 1 Year Yield
1.5
1.8
3
3
1.0
2
0.9
0.5
-0.0
1
-0.9
0.0
-1.8
-0.5
0
-2.7
-1
-1.0
-3.6
-2
-1.5
-4.5
-5.4
-2.0
0
3
6
9
12
15
-3
0
M1
3
6
9
12
15
0
Nominal 2 Year Yield
4
3
6
9
Real 2 Year Yield
1.0
3.0
2.5
3
0.5
2.0
2
0.0
1.5
1
1.0
-0.5
0.5
0
-1.0
0.0
-1
-0.5
-1.5
-2
-1.0
-3
-2.0
0
3
6
9
12
15
-1.5
0
3
6
73
9
12
15
0
3
6
9
Iljxuh 45= Vhqvlwlylw| wr Srvlwlyh Fkdqjhv lq Udph| dqg Vkdslur Gdwlqj ri wkh Nruhdq Zdu
Hslvrgh
Real GDP
Residential Investment
4.0
5.0
Point estimate
3.5
2.5
Plus 1
Plus 2
3.0
0.0
Plus 3
2.5
-2.5
2.0
-5.0
1.5
-7.5
1.0
-10.0
0.5
-12.5
0.0
-0.5
-15.0
0
3
6
9
12
15
0
Nonresidential Investment
3
6
9
12
15
After Tax Manufacturing Wages / CPI
12
0.5
0.0
10
-0.5
8
-1.0
6
-1.5
4
-2.0
-2.5
2
-3.0
0
-3.5
-2
-4.0
0
3
6
9
12
15
0
Nondurables + Services
3
6
9
12
15
12
15
Government Purchases
1.5
20.0
17.5
1.0
15.0
12.5
0.5
10.0
7.5
0.0
5.0
2.5
-0.5
0.0
-1.0
-2.5
0
3
6
9
12
15
0
74
3
6
9
Iljxuh 46= Vhqvlwlylw| wr Qhjdwlyh Fkdqjhv lq Udph| dqg Vkdslur Gdwlqj ri wkh Nruhdq Zdu
Hslvrgh
Real GDP
Residential Investment
6
8.0
Point estimate
Minus 1
5
4.0
Minus 2
4
Minus 3
0.0
3
-4.0
2
-8.0
1
-12.0
0
-1
-16.0
0
3
6
9
12
15
0
Nonresidential Investment
3
6
9
12
15
After Tax Manufacturing Wages / CPI
14
-0.5
12
-1.0
-1.5
10
-2.0
8
-2.5
6
-3.0
4
-3.5
2
-4.0
0
-4.5
0
3
6
9
12
15
0
Nondurables + Services
3
6
9
12
15
12
15
Government Purchases
1.75
20
1.40
15
1.05
10
0.70
0.35
5
0.00
0
-0.35
-0.70
-5
0
3
6
9
12
15
0
75
3
6
9
Iljxuh 47= Uhvsrqvhv wr Udqgrpo| Vhohfwhg Hslvrghv
Real GDP - Government
After Tax Manufacturing Wages - Government
6
7.5
4
5.0
2
2.5
0
0.0
-2
-2.5
-4
-5.0
-6
-7.5
-8
-10.0
-10
-12.5
-12
-15.0
0
3
6
9
12
15
0
Residential - Government
3
6
9
12
15
Residential + Durables - Government
20
15
10
10
5
0
0
-5
-10
-10
-15
-20
-20
-30
-25
0
3
6
9
12
15
0
Nonresidential - Government
3
6
9
12
15
12
15
Residential - Nonresidential
12.0
15
10
8.0
5
4.0
0
0.0
-5
-10
-4.0
-15
-8.0
-20
-12.0
-25
0
3
6
9
12
15
0
76
3
6
9
Iljxuh 48= Prgho Edvhg Lpsxovh Uhvsrqvh Ixqfwlrqv= Jryhuqphqw Sxufkdvhv LLG
-3
Government
x 10
1
Output
Hours
0.012
8
0.8
0.01
0.008
6
0.6
0.006
0.4
4
0.2
2
0.004
0
5
10
15
0
Consumption
0
0.002
5
10
15
0
Market Investment
5
10
15
Home Investment
0
0
-0.002
-0.1
-0.2
-0.004
-0.2
-0.006
-0.3
-0.4
-0.6
-0.4
-0.008
-0.8
-0.5
-0.01
5
10
15
5
-3
Basis Points
Interest Rate
0.05
0
0.04
-1
0.03
-2
x 10
10
15
5
10
Wage
ψ=0
ψ = 0.5
0.02
-3
ψ = -1
0.01
0
-4
5
10
15
5
10
77
15
15
Iljxuh 49= Prgho Edvhg Lpsxovh Uhvsrqvh Ixqfwlrqv 0 Jryhuqphqw Sxufkdvhv DU+4,
Government
Output
Hours
1
0.07
0.8
0.08
0.06
0.06
0.05
0.6
0.04
0.04
0.4
0.03
0.02
0.2
0.02
0.01
0
5
10
15
0
Consumption
0
5
10
15
0
Market Investment
2
5
10
15
Home Investment
0
-0.5
-0.01
1.5
-1
-0.02
1
-1.5
-0.03
-2
0.5
-0.04
-2.5
0
-0.05
5
10
15
-3
5
Interest Rate
10
15
5
10
Wage
0
0.16
0.14
Basis Points
0.12
ψ=0
-0.005
0.1
0.08
ψ = 0.5
-0.01
0.06
ψ = -1
0.04
-0.015
0.02
0
5
10
15
5
10
78
15
15
Iljxuh 4:= Prgho Edvhg Lpsxovh Uhvsrqvh Ixqfwlrqv= Jryhuqphqw Sxufkdvhv 0 Hvwlpdwhg Pry0
lqj Dyhudjh Uhsuhvhqwdwlrq
Government
Output
Hours
1.6
1.5
12
1.4
10
1.2
1
8
1
0.8
6
4
0.6
0.5
0.4
2
0.2
0
5
10
15
0
Consumption
5
10
15
0
Market Investment
5
10
15
Home Investment
0
0
-0.1
40
-0.2
-10
30
-0.3
-0.4
-20
20
-0.5
-0.6
-30
10
-0.7
-40
0
-0.8
5
10
15
5
Interest Rate
10
15
5
10
Wage
0
2
-0.05
ψ=0
Basis Points
1.5
-0.1
1
ψ = 0.5
-0.15
-0.2
ψ = -1
0.5
-0.25
0
5
10
15
5
10
79
15
15
@FedFRASER