Essays on the effects of fiscal policy: Impact of Government spending in the UK

This thesis investigates the economic effects of government spending in the UK, examining if the size of spend and what the government buys play a role in the reported effects. This is done by examining the disaggregated effects of aggregated and disaggregated government spending at sectoral, industry and firm level. The first original contribution extends the simple income and expenditure model to highlight the importance of appropriately accounting for imports in sectoral government spending. The second contribution investigates the output and price effects of industry-specific government spending using a newly constructed measure of industry-specific government demand. The final contribution provides micro-level evidence by mapping firm-level central government expenditure to firms' financial accounts to report firm-level employment and wage effects of government demand. The general conclusion reached by the thesis is that not only is what the government buys important, but the size of government demand is also a key factor in the multiplier effect of government spending for the UK. All three contribution chapters emphasise the importance of what the government buys, while the importance of government demand size is explored in chapters three and four.