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Government spending shocks lead to economic downturn and housing market instability.

SSRN Electronic Journal
The Macroeconomic Effects of Fiscal Policy
António Afonso, Ricardo M. Sousa

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The article explores how government spending and revenue affect the economy using real-world data. They found that government spending changes have a small impact on GDP, can crowd out private investment, and affect housing and stock prices. Revenue changes have a positive effect on housing and stock prices but lead to an increase in the exchange rate. It's crucial to consider government debt when analyzing these effects.