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Fiscal Multipliers at the Zero Lower Bound : The Role of Policy Inertia

Hills, Timothy - 2015

multiplier nontrivially when the policy rate is constrained at the zero lower bound (ZLB). In the economy with policy inertia … the recession via expectations. In our baseline calibration, the output multiplier at the ZLB is 2.5 when the weight on …

Persistent link: https://www.econbiz.de/10013031117

Expectations-driven liquidity traps : implications for monetary and fiscal policy

Nakata, Taisuke; Schmidt, Sebastian - 2019 - This draft: June 2019

We study optimal monetary and fiscal policy in a New Keynesian model where occasional declines in agents' confidence give rise to persistent liquidity trap episodes. There is no straightforward recipe for enhancing welfare in this economy. Raising the inflation target or appointing an...

Persistent link: https://www.econbiz.de/10012181947

Optimal inflation target with expectations-driven liquidity traps

Coyle, Philip; Nakata, Taisuke - 2019 - This draft: April 2019

In expectations-driven liquidity traps, a higher inflation target is associated with lower inflation and consumption. As a result, introducing the possibility of expectations-driven liquidity traps to an otherwise standard model lowers the optimal inflation target. Using a calibrated New...

Persistent link: https://www.econbiz.de/10012181161

Uncertainty at the Zero Lower Bound

Nakata, Taisuke - 2015

This paper examines how the presence of uncertainty alters allocations and prices when the nominal interest rate is constrained by the zero lower bound. I conduct the analysis using a standard New Keynesian model in which the nominal interest rate is determined according to a truncated Taylor...

Persistent link: https://www.econbiz.de/10013035763

Credible forward guidance

Nakata, Taisuke; Sunakawa, Takeki - 2019 - This draft: April 2019

We analyze credible forward guidance policies in a sticky-price model with an effective lower bound (ELB) constraint on nominal interest rates by solving a series of optimal sustainable policy problems indexed by the duration of reputational loss. Lower-for-longer policies --- while effective in...

Persistent link: https://www.econbiz.de/10012181173

Political Connections, Allocation of Stimulus Spending, and the Jobs Multiplier

Choi, Joonkyu; Penciakova, Veronika; Saffie, Felipe - 2021

Using American Recovery and Reinvestment Act (ARRA) data, we show that firms lever their political connections to win stimulus grants and public expenditure channeled through politically connected firms hinders job creation. We build a unique database that links campaign contributions and state...

Persistent link: https://www.econbiz.de/10013231929

The Analytics of SVARs : A Unified Framework to Measure Fiscal Multipliers

Caldara, Dario - 2012

that standard identification schemes imply different priors on elasticities, generating a large dispersion in multiplier … inference on multipliers. Our results for the U.S. for the period 1947-2006 suggest that the probability of the tax multiplier … being larger than the spending multiplier is below 0.5 at all horizons …

Persistent link: https://www.econbiz.de/10013106827

Fiscal policy and aggregate demand in the U.S. before, during and following the Great Recession

Cashin, David; Lenney, Jamie; Lutz, Byron F.; Peterman, … - 2017

We examine the effect of federal and subnational fiscal policy on aggregate demand in the U.S. by introducing the fiscal effect (FE) measure. FE can be decomposed into three components. Discretionary FE quantifies the effect of discretionary or legislated policy changes on aggregate demand....

Persistent link: https://www.econbiz.de/10011709630

Bond risk premiums at the zero lower bound

Andreasen, Martin Møller; Jørgensen, Kasper; Meldrum, … - 2019

This paper documents a significantly stronger relationship between the slope of the yield curve and future excess bond returns on Treasuries from 2008-2015 than before 2008. This new predictability result is not matched by the standard shadow rate model with Gaussian factor dynamics, but...

Persistent link: https://www.econbiz.de/10012181201

How Would Us Banks Fare in a Negative Interest Rate Environment?

Arseneau, David M. - 2017

The effectiveness of negative interest rates as a monetary policy tool depends importantly on the response of the banking sector. This paper offers unique new insights for U.S. banks by using supervisory data to examine bank-level expectations regarding the impact of negative rates on...

Persistent link: https://www.econbiz.de/10014352395

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