A key empirical regularity regrading the effect of fiscal policy is that private consumption tends to increase in response to a hike in government spending. In this paper, we provide an explanation for this stylized fact based on the notion of Keeping Up with the Joneses (KUJ), another empirical observation well documented in the literature. • We study the effects of government spending shocks on private consumption in the presence of consumption externalities. • We show that keeping up with the Joneses is a necessary condition to generate positive consumption multipliers. • We derive the necessary and sufficient conditions in the static model under which positive consumption multipliers arise. • We provide numerical examples in static and dynamic models for the crowd-in effect of government spending on consumption.