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Fiscal Stimulus and Distortionary Taxation
Uhlig, Harald; Drautzburg, Thorsten - National Bureau of Economic Research (NBER) - 2011
We quantify the fiscal multipliers in response to the American Recovery and Reinvestment Act (ARRA) of 2009. We extend the benchmark Smets-Wouters (2007) New Keynesian model, allowing for credit-constrained households, the zero lower bound, government capital and distortionary taxation. The...
Persistent link: https://www.econbiz.de/10009652842
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The Continental Dollar: How the American Revolution was Financed with Paper Money--Initial Design and Ideal Performance
Grubb, Farley - National Bureau of Economic Research (NBER) - 2013
The purpose of this paper is to convince the reader that the Continental dollar was a zero-interest bearer bond and not a fiat currency--thereby overturning 230 years of scholarly interpretation; to show that the public and leading Americans knew and acted on this fact, and to illustrate the...
Persistent link: https://www.econbiz.de/10010950679
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Crunch Time: Fiscal Crises and the Role of Monetary Policy
Hamilton, James; Mishkin, Frederic; Greenlaw, David; … - National Bureau of Economic Research (NBER) - 2013
Countries with high debt loads are vulnerable to an adverse feedback loop in which doubts by lenders lead to higher sovereign interest rates which in turn make the debt problems more severe. We analyze the recent experience of advanced economies using both econometric methods and case studies...
Persistent link: https://www.econbiz.de/10010950708
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Macroeconomic Analysis without the Rational Expectations Hypothesis
Woodford, Michael - National Bureau of Economic Research (NBER) - 2013
; non-fundamental sources of aggregate instability; the trade-off between inflation stabilization and output …
Persistent link: https://www.econbiz.de/10010951284
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Monetary Policy and Debt Fragility
Camous, Antoine; Cooper, Russell - National Bureau of Economic Research (NBER) - 2014
The valuation of government debt is subject to strategic uncertainty, stemming from investors' sentiments. Pessimistic lenders, fearing default, bid down the price of debt. This leaves a government with a higher debt burden, increasing the likelihood of default and thus confirming the pessimism...
Persistent link: https://www.econbiz.de/10010951468
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Debt Fragility and Bailouts
Cooper, Russell - National Bureau of Economic Research (NBER) - 2012
This paper studies debt fragility and the sharing of the resulting strategic uncertainty through ex post bailouts. Default arises in equilibrium because of both fundamental shocks and beliefs. The probability of default depends on borrowing rates and, in equilibrium, on the beliefs of lenders...
Persistent link: https://www.econbiz.de/10011213897
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Escaping the Great Recession
Bianchi, Francesco; Melosi, Leonardo - National Bureau of Economic Research (NBER) - 2014
We show that policy uncertainty about how the rising public debt will be stabilized empirically accounts for the lack of deflation in the US economy during the zero-lower-bound period. Announcing fiscal austerity is detrimental in the short run, but it preserves macroeconomic stability. On the...
Persistent link: https://www.econbiz.de/10011269066
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Liquidity Traps and Expectation Dynamics: Fiscal Stimulus or Fiscal Austerity?
Benhabib, Jess; Evans, George William; Honkapohja, … - National Bureau of Economic Research (NBER) - 2012
We examine global dynamics under infinite-horizon learning in New Keynesian models where the interest-rate rule is subject to the zero lower bound. As in Evans, Guse and Honkapohja (2008), the intended steady state is locally but not globally stable. Unstable deflationary paths emerge after...
Persistent link: https://www.econbiz.de/10011271457
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Self-Fulfilling Debt Crises: Can Monetary Policy Really Help?
Bacchetta, Philippe; van Wincoop, Eric; Perazzi, Elena - National Bureau of Economic Research (NBER) - 2015
preclude a debt crisis through inflation, lowering the real interest rate and raising output. These reduce the real value of … avert a crisis require excessive inflation for a sustained period of time. Unconventional monetary policy can only be …
Persistent link: https://www.econbiz.de/10011276444
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Optimal Inflation Stabilization in a Medium-Scale Macroeconomic Model
Schmitt-Grohé, Stephanie Schmitt-Grohe; Uribe, Martin - National Bureau of Economic Research (NBER) - 2005
optimal inflation rate appears to be highly sensitive to the assumed degree of price stickiness. Within the window of … available estimates of price stickiness (between 2 and 5 quarters) the optimal rate of inflation ranges from -4.2 percent per … assumes that lump-sum taxes are unavailable and fiscal instruments take the form of distortionary income taxes. In this case …
Persistent link: https://www.econbiz.de/10005087498