Non-ricardian aspects of fiscal policy in Chile
In this paper we examine the effects of government spending shocks in the Chilean economy. The study of the effects of such shocks in an emerging market economy is of special interest because of the potential presence of non-Ricardian households that is households that do not own any assets or have any liabilities and just consume their current labor income. The existence of non-Ricardian households has been suggested as a key ingredient in the transmission mechanism of government spending shocks in some developed economies. Several factors may explain non-Ricardian behavior including myopia and lack of access to capital markets. Such behavior is likely to be especially important in less developed economies.