Intertemporal substitution in war and peace: Evidence from the United Kingdom, 1830-1990

Hendrik P. Van Dalen*

*Corresponding author for this work

Research output: Contribution to journal/periodicalArticleScientificpeer-review

Abstract

In this paper we present estimates of individual value of public consumption and the intertemporal substitution elasticity by means of the Euler-equation approach. Historical data for the United Kingdom covering the period 1830-1990 are used to measure the effect of public consumption on private consumption. The U.K. intertemporal substitution elasticity is 0.24 and the shares of private and public consumption in the aggregate consumption bundle are 92% and 8%, respectively. The positive valuation applies only to wartime years. In peacetime years government and private consumption goods can at best be described as independent goods.

Original languageEnglish
Pages (from-to)447-469
Number of pages23
JournalJournal of Macroeconomics
Volume17
Issue number3
DOIs
Publication statusPublished - 1995

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