Table 6 Welfare costs of fiscal shocks...

Table 6

Welfare costs of fiscal shocks (recurrent spending)

	${\bar{π}}^{*} = {1.02}^{0.25}$		${\bar{π}}^{*} = {1.06}^{0.25}$
Welfare cost		0.45%		0.69%
Welfare	−207.63	−208.53	−213.91	−215.34
$U_{d}$	−206.99	−206.99	−207.93	−207.93
$U_{l}$	−0.44	−0.94	−4.40	−5.46
$U_{v}$	−0.21	−0.60	−1.58	−1.95
$C_{S S}$	0.84	0.84	0.84	0.84
$H_{S S}$	1.04	1.04	1.04	1.04
E(C)*	−0.36	−0.79	−0.35	−0.44
E(H)*	0.01	0.01	0.15	0.15
100 $σ_{C}$	0.61	0.85	1.77	1.83
100 $σ_{H}$	1.32	3.91	1.72	4.34

	${\bar{π}}^{*} = {1.02}^{0.25}$		${\bar{π}}^{*} = {1.06}^{0.25}$
Welfare cost		0.45%		0.69%
Welfare	−207.63	−208.53	−213.91	−215.34
$U_{d}$	−206.99	−206.99	−207.93	−207.93
$U_{l}$	−0.44	−0.94	−4.40	−5.46
$U_{v}$	−0.21	−0.60	−1.58	−1.95
$C_{S S}$	0.84	0.84	0.84	0.84
$H_{S S}$	1.04	1.04	1.04	1.04
E(C)*	−0.36	−0.79	−0.35	−0.44
E(H)*	0.01	0.01	0.15	0.15
100 $σ_{C}$	0.61	0.85	1.77	1.83
100 $σ_{H}$	1.32	3.91	1.72	4.34

Note(s): *Expressed as a percentage deviation from the deterministic steady-state. $U_{d}$ ⁠, $U_{l}$ and $U_{v}$ are the deterministic steady-state, level and volatility components, respectively $\bar{g} = 1.23; ρ_{g} = 0.46; σ_{g} = 0.034$

Source(s): Author's calculation

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