Additionally, the surge in consumption and investment spending is expected to continue and can even be further boosted by the increased disposable income. Confidence in the economy is expected to remain strong and is supported by sentiments expressed by retailers and businesses in RBF’s business expectations and retail sales surveys which suggests a positive outlook for consumption and investment activity in 2014.
Ricardo, in a joint paper with Hyunseung Oh, documented that during the Great Recession much of the increase in government expenditures across the OECD countries was in government transfers.8 To study the effects of transfers, Ricardo and his coauthor proposed a model without a representative agent or Ricardian equivalence, in which transfers affect the economy because of imperfect credit markets, uncertainty and sticky information.