THE CHANGING STRUCTURE OF GOVERNMENT CONSUMPTION SPENDING

We document a secular change in the structure of government consumption spending: Over time purchases relatively more private-sector goods, and relies less on its own production value added. This process alters transmission fiscal policy, by dampening response hours, public added, labor share to spending shocks, while leaving total output unchanged. rationalize these facts general equilibrium model where decline public-sector relative productivity drives changing spending, which turn modifies mechanism shocks.