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The Cyclical Behavior of the Price-Cost Markup
Nekarda, Christopher J. - 2013
A countercyclical markup of price over marginal cost is the key transmission mechanism for demand shocks in textbook New Keynesian (NK) models. This paper re-examines the foundation of those models. We study the cyclicality of markups in the private economy as well as in detailed manufacturing...
Persistent link: https://www.econbiz.de/10013080843
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An Exploration of Optimal Stabilization Policy
Mankiw, N. Gregory - 2011
This paper examines the optimal response of monetary and fiscal policy to a decline in aggregate demand. The theoretical framework is a two-period general equilibrium model in which prices are sticky in the short run and flexible in the long run. Policy is evaluated by how well it raises the...
Persistent link: https://www.econbiz.de/10013124860
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Fiscal Multipliers : A Heterogenous-Agent Perspective
Broer, Tobias; Krusell, Per; Öberg, Erik - 2022
We use an analytically tractable heterogeneous-agent (HANK) version of the standard New Keynesian model to show how the size of fiscal multipliers depends on i) the distribution of factor incomes, and ii) the source of nominal rigidities. With sticky prices but flexible wages, the standard...
Persistent link: https://www.econbiz.de/10014089542
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Macroeconomic Dynamics Near the ZLB : A Tale of Two Countries
Aruoba, S. Borağan - 2013
We propose and solve a small-scale New-Keynesian model with Markov sunspot shocks that move the economy between a targeted-inflation regime and a deflation regime and fit it to data from the U.S. and Japan. For the U.S. we find that adverse demand shocks have moved the economy to the zero lower...
Persistent link: https://www.econbiz.de/10013078597
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New Keynesian Versus Old Keynesian Government Spending Multipliers
Cogan, John F.; Cwik, Tobias J.; Taylor, John B.; … - 2021
Renewed interest in fiscal policy has increased the use of quantitative models to evaluate policy. Because of modelling uncertainty, it is essential that policy evaluations be robust to alternative assumptions. We find that models currently being used in practice to evaluate fiscal policy...
Persistent link: https://www.econbiz.de/10013313664
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By How Much Does GDP Rise If the Government Buys More Output?
Hall, Robert E. - 2009
. 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 …
Persistent link: https://www.econbiz.de/10013154570
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Real Keynesian Models and Sticky Prices
Beaudry, Paul - 2018
In this paper we present a generalized sticky price model which allows, depending on the parameterization, for demand shocks to maintain strong expansionary effects even in the presence of perfectly flexible prices. The model is constructed to incorporate the standard three-equation New...
Persistent link: https://www.econbiz.de/10012929558
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Are Government Spending Multipliers Greater During Periods of Slack? Evidence from 20th Century Historical Data
Owyang, Michael - 2013
A key question that has arisen during recent debates is whether government spending multipliers are larger during times when resources are idle. This paper seeks to shed light on this question by analyzing new quarterly historical data covering multiple large wars and depressions in the U.S. and...
Persistent link: https://www.econbiz.de/10013087434
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The Time for Austerity : Estimating the Average Treatment Effect of Fiscal Policy
Jordà, Òscar - 2013
After the Global Financial Crisis a controversial rush to fiscal austerity followed in many countries. Yet research on the effects of austerity on macroeconomic aggregates was and still is unsettled, mired by the difficulty of identifying multipliers from observational data. This paper...
Persistent link: https://www.econbiz.de/10013076565
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Measuring the Output Responses to Fiscal Policy
Auerbach, Alan J. - 2010
shocks, with military spending having the largest multiplier. Third, we show that controlling for predictable components of …
Persistent link: https://www.econbiz.de/10013138770