Government spending at the zero lower bound (ZLB) is not necessarily welfare enhancing, even when its output multiplier …

We argue that the government-spending multiplier can be much larger than one when the zero lower bound on the nominal … larger is the value of the multiplier. After providing intuition for these results, we investigate the size of the multiplier … in a dynamic, stochastic, general equilibrium model. In this model the multiplier effect is substantially larger than one …

spending multiplier is large when DNWR binds, but the nature of recession matters due to the opposing response of inflation. In …

. With allowance for other factors holding back GDP growth during those wars, the multiplier linking government purchases to … as well. On the other hand, neoclassical models have a much lower multiplier, because they predict that consumption falls … when purchases rise. The key features of a model that delivers a higher multiplier are (1) the decline in the markup ratio …

or decreases, the "true" long-run multiplier for bad times (and government spending going up) turns out to be 2 ….3 compared to 1.3 if we just distinguish between recession and expansion. In extreme recessions, the long-run multiplier reaches …