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Effects of Fiscal Stimulus in Structural Models

Kumhof, Michael - 2010

The paper assesses, using seven structural models used heavily by policymaking institutions, the effectiveness of temporary fiscal stimulus. Models can, more easily than empirical studies, account for differences between fiscal instruments, for differences between structural characteristics of...

Persistent link: https://www.econbiz.de/10014402816

Macrofinancial analysis in the world economy : a panel dynamic stochastic general equilibrium approach

Vitek, Francis - 2015

This paper develops a structural macroeconometric model of the world economy, disaggregated into forty national economies. This panel dynamic stochastic general equilibrium model features a range of nominal and real rigidities, extensive macrofinancial linkages, and diverse spillover...

Persistent link: https://www.econbiz.de/10011408247

Government spending effects in a policy constrained environment

Mao, Ruoyun; Yang, Shu-Chun S. - 2020

The theoretical literature generally finds that government spending multipliers are bigger than unity in a low interest rate environment. Using a fully nonlinear New Keynesian model, we show that such big multipliers can decrease when 1) an initial debt-to-GDP ratio is higher, 2) tax burden is...

Persistent link: https://www.econbiz.de/10012251969

Debt Stabilization Bias and the Taylor Principle : Optimal Policy in a New Keynesian Model with Government Debt and Inflation Persistence

Vines, David - 2007

We analyse optimal monetary and fiscal policy in a New-Keynesian model with public debt and inflation persistence. Leith and Wren-Lewis (2007) have shown that optimal discretionary policy is subject to a ''debt stabilization bias'' which requires debt to be returned to its pre-shock level. This...

Persistent link: https://www.econbiz.de/10014399841

Optimal Monetary and Fiscal Policy with Limited Asset Market Participation

Stehn, Sven Jari - 2009

This paper characterises the jointly optimal monetary and fiscal stabilisation policy in a new Keynesian model that allows for consumers who lacking access to asset markets consume their disposable income each period. With full asset market participation, the optimal policy relies entirely on...

Persistent link: https://www.econbiz.de/10014402237

Strategic Interactions Between An Independent Central Bank and a Myopic Government with Government Debt

Stehn, Sven Jari - 2008

We analyse optimal discretionary games between a benevolent central bank and a myopic government in a New Keynesian model. First, when lump-sum taxes are available and public debt is absent, we show that a Nash game results in too much government spending and excessively high interest rates,...

Persistent link: https://www.econbiz.de/10014401471

The costs of macroprudential deleveraging in a liquidity trap

Chen, Jiaqian; Finocchiaro, Daria; Lindé, Jesper; … - 2020

We examine the effects of various borrower-based macroprudential tools in a New Keynesian environment where both real and nominal interest rates are low. Our model features long-term debt, housing transaction costs and a zero-lower bound constraint on policy rates. We find that the long-term...

Persistent link: https://www.econbiz.de/10012251966

What do we talk about when we talk about output gaps?

Barkema, Jelle; Gudmundsson, Tryggvi; Mrkaic, Mico - 2020

Estimates of output gaps continue to play a key role in assessments of the stance of business cycles. This paper uses three approaches to examine the historical record of output gap measurements and their use in surveillance within the IMF. Firstly, the historical record of global output gap...

Persistent link: https://www.econbiz.de/10012392643

The negative mean output gap

Aiyar, Shekhar; Voigts, Simon - 2019

We argue that in an economy with downward nominal wage rigidity, the output gap is negative on average. Because it is more difficult to cut wages than to increase them, firms reduce employment more during downturns than they increase employment during expansions. This is demonstrated in a simple...

Persistent link: https://www.econbiz.de/10012103632

Sovereign Risk, Fiscal Policy, and Macroeconomic Stability

Küster, Keith - 2012

fiscal policy. Using a variant of the model by Curdia and Woodford (2009), we study a ""sovereign risk channel"" through … which sovereign default risk raises funding costs in the private sector. If monetary policy is constrained, the sovereign … risk channel exacerbates indeterminacy problems: private-sector beliefs of a weakening economy may become self …

Persistent link: https://www.econbiz.de/10014396923