Analysis of Government Spending the Frequency Domain

摘要

This paper utilizes frequency-domain techniques to identify and characterize211u001eeconomically important properties of government spending. Using post-war data for 211u001ethe United States, the paper first identifies peaks in the estimated spectra of 211u001ethe major components of fiscal spending. Second, the paper examines the 211u001erelationship between these fiscal variables and various measures of aggregate 211u001eeconomic activity. The analysis reveals that defense spending is best modeled as 211u001eexogenous with respect to the aggregate economy, and nondefense spending (growth) 211u001eappears to be white noise. Further, the unemployment rate has a very high 211u001ecoherency at the business cycle frequencies with unemployment insurance but far 211u001esmaller coherency with other transfer payments. Finally, the paper finds a 211u001emoderate degree of direct substitutability between certain types of government 211u001espending and private consumption and in the process illustrates how spectral 211u001etechniques can be readily combined with a standard intertemporal optimizing 211u001emodel.