We investigate the size of the multiplier at the ZLB in a New keynesian model. It ranges from around -0.25 to +1.5, depending on the extent to which government spending is productive, substitutable or not for private consumption.

In this paper we investigate the labor market dynamics in a matching model where fluctuations are driven by movements in the discount factor. A comparison with the standard productivity shock is provided. Movements in the discount factor can be used as a proxy for variations in financial risks,...

In this paper we investigate the impact of the recent US unemployment benefits extension on the labor market dynamic when the nominal interest rate is held at the zero lower bound (ZLB). Using a New Keynesian model, our quantitative experiments suggest that, in contrast to the existing...

This article shows that the government spending multiplier is very high in a New Keynesian framework but less than one when the Taylor Rule is active. It can be higher when the economy is stuck at the Zero Lower Bounds. Moreover, we show that the deeper the recession the larger the multiplier.

Public investment represents a non-negligible fraction of total public expenditures. Yet, theoretical studies of the effects of public spending when the economy is stuck in a liquidity trap invariably assume that government expenditures are entirely wasteful. In this paper, we consider a...

I develop a New Keynesian model with search and matching frictions, in which the government buys goods produced by the firms. I solve the non-linear model globally and examine the magnitude of government spending multipliers in and out of the ZLB. I distinguish the cases of Nash-bargained and...

We study the effectiveness of public investment in stimulating an economy stuck in a liquidity trap. We do so in the context of a tractable new-Keynesian economy in which a fraction of government spending increases the stock of public capital subject to a time-to-build constraint. Public...

We implement a recently developed econometric model, the Factor Augmented VAR (FAVAR), to investigate the dynamic effects of government spending on key macroeconomic variables. In line with existing literature, we find that a government spending shock has positive effects on consumption and...

Recently, a series of papers have argued that output multipliers of government spending can be potentially large during times when the Zero Lower Bound on nominal interest rates is binding (Christiano et al. (2011)). This literature generally considers "excess-savings" liquidity traps and...

This paper studies the dynamic effects of unemployment insurance experience rating systems in the US. In this system, the unemployment insurance payroll tax rate depends on the firm layoffs history and the cost of insured unemployed workers caused by firms? dismissal decisions. However, each...