The private sector's perception of fiscal actions

Abstract

This study attempts to investigate the household's perception of fiscal actions by testing the ultrarationality hypothesis advanced by David and Scadding (1974). A transcendental logarithmic utility function was used to present the house hold's choice. Demand equations for private and public goods were derived directly from utility maximization and were estimated simultaneously. Empirical findings offered no support for the view that households perceive government activities and adjust their behavior accordingly.