Fiscal Stimulus with Spending Reversals

The impact of fiscal stimulus depends not only on short-term tax and spending policies, but also on expectations about offsetting measures in the future. This paper analyzes the effects of an increase in government spending under a plausible debt-stabilizing policy that links current stimulus to a subsequent period of spending restraint. Accounting for such spending reversals brings an otherwise standard new Keynesian model in line with the stylized facts of fiscal transmission, including the crowding-in of consumption and the 'puzzle' of real exchange rate depreciation. Time series evidence f

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Year of publication:	2009
Authors:	Müller, Gernot
Other Persons:	Corsetti, Giancarlo (contributor) ; Meier, André (contributor)
Publisher:	Washington : International Monetary Fund
Subject:	Finanzpolitik \| Fiscal policy \| Theorie \| Theory \| Öffentliche Schulden \| Public debt \| Öffentliche Ausgaben \| Public expenditure \| Offene Volkswirtschaft \| Open economy \| Erwartungsbildung \| Expectation formation \| Neoklassische Synthese \| Neoclassical synthesis \| Antizyklische Finanzpolitik \| Countercyclical fiscal policy

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Extent:	Online-Ressource (41 p)
Series:	IMF Working Papers IMF working paper ; WP/09/106
Type of publication:	Book / Working Paper
Language:	English
Notes:	Description based upon print version of record Contents; I. Introduction; II. Model; A. Final Good Firms; B. Intermediate Good Firms; C. Households; D. Government; E. Equilibrium; III. Fiscal Policy Transmission with Spending Reversals; A. Parameterization; Tables; 1. Parameterization of the Model; B. Quantitative Analysis; Figures; 1. Effect of Government Spending Shocks: Sticky Price vs. Flexible Price Allocation; 2. Effect of Government Spending Shocks: Debt-Stabilizing vs. Debt- Insensitive Spending Rule; 3. Effect of Government Spending Shocks: Model with Limited Participation in Asset Markets; IV. Time Series Evidence A. VAR SpecificationB. Results; 4. Fiscal Policy Transmission According to VAR Model: Effects of VAR Shock; 5. Fiscal Policy Transmission According to VAR Model: Effects of Military Event; V. Conclusion; References; Appendices; I. More Simulation Results; Appendix Figures; A.1. Effect of Government Spending Shocks: Debt-Stabilizing vs. Debt- Insensitive Government Spending under Complete Markets; A.2. Effects of Government Spending Shocks: High Debt Elasticity of Interest Rates vs. Baseline; II. Data; III. Sensitivity Analysis of VAR Results A.3. Fiscal Policy Transmission According to VAR Model: Effects of VAR Shock. Sensitivity AnalysisA.4. Fiscal Policy Transmission According to VAR Model: Effects of Military Event. Sensitivity Analysis; A.5. Fiscal Policy Transmission According to VAR Model: Effects of VAR Shock in Nominal VAR; A.6. Fiscal Policy Transmission According to VAR Model: Effects of Military Event in Nominal VAR
ISBN:	978-1-4518-7253-8 ; 978-1-4519-1683-6 ; 978-1-4518-7253-8
Source:	ECONIS - Online Catalogue of the ZBW

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