Effectiveness of the Australian Fiscal Stimulus Package: A DSGE Analysis

We develop and estimate a small open economy DSGE model to investigate the eectiveness of the Australian scal stimulus package introduced in the aftermath of the global nancial crisis (GFC). The timing and magnitudes of GFC shocks, scal shocks that mimic the stimulus transfers, and accommodative monetary policy shocks are carefully calibrated and fed into various simulation experiments. The results suggest that the stimulus transfers were eective in combating the economic downturn caused by the GFC, however, the scale of the transfer initiative seems to be excessive. K