sticky prices, a demand for money, taxation, and stochastic government consumption. We consider simple feedback rules whereby …

have a quantitatively important effect on real variables like output, consumption, investment, and hours worked. To … triggers a fall in output, consumption, investment, and hours worked, and a notable change in the current account of the …

in government purchases leads to an expansion in output and private consumption, a deterioration in the trade balance … fit well the observed responses of output, consumption, the trade balance, and the real exchange rate to an unanticipated … spending consumption and wages fail to increase on impact, which is consistent with the empirical evidence stemming from the …