The Keynesian Multiplier and the Pigou Effect under Substitution between Private and Public Consumption Articles uri icon

publication date

  • January 2010

start page

  • 829

end page

  • 836


  • 1


  • 30

International Standard Serial Number (ISSN)

  • 0029-1676

Electronic International Standard Serial Number (EISSN)

  • 1503-8831


  • In this paper we present a fixprice model in which private and public consumption show some degree of substitution. We offer formulae for the Keynesian multiplier which depend on this degree of substitution. We
    also show that there is a Pigou effect and that, sometimes, this effect
    is larger than the Keynesian multiplier.