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D'Alessandro, Antonello; Fella, Giulio - 2017

Using a structural VAR analysis, we document that an increase in government purchases raises private consumption, total factor productivity (TFP) and the real wage. This poses a puzzle for both neoclassical and New-Keynesian models. We extend a standard New-Keynesian model to allow for skill...

Persistent link: https://www.econbiz.de/10011694749

Expansionary and contractionary fiscal multipliers in the U.S.

Kapetanios, George; Koutroumpis, Panagiotis; Tsoukis, … - 2022

We estimate the fiscal (spending) multiplier using quarterly U.S. data, 1986-2017. We define government spending shocks …

Persistent link: https://www.econbiz.de/10013191269

Regional consumption responses and the aggregate fiscal multiplier

Dupor, Bill; Karabarbounis, Marios; Kudlyak, Marianna; … - 2018

spending by $0.29. We translate the regional consumption responses to an aggregate fiscal multiplier using a multi-region, New … multiplier, a result that distinguishes our incomplete markets model from models with complete markets. The aggregate consumption … multiplier is 0.64, which implies an output multiplier higher than one. The aggregate consumption multiplier is larger than the …

Persistent link: https://www.econbiz.de/10011911427

Monetary policy and economic performance since the financial crisis

Caldara, Dario; Gagnon, Etienne; Martínez-García, Enrique - 2020

We review macroeconomic performance over the period since the Global Financial Crisis and the challenges in the pursuit of the Federal Reserve's dual mandate. We characterize the use of forward guidance and balance sheet policies after the federal funds rate reached the effective lower bound. We...

Persistent link: https://www.econbiz.de/10012308081

Tight money-tight credit : coordination failure in the conduct of monetary and financial policies

Carrillo, Julio A.; Mendoza, Enrique G.; Nuguer, Victoria; … - 2019

Violations of Tinbergen's Rule and strategic interaction undermine monetary and financial policies significantly in a New Keynesian model with the Bernanke-Gertler accelerator. Welfare costs of risk shocks are large because of efficiency losses and income effects of costly monitoring, but they...

Persistent link: https://www.econbiz.de/10012127412

Current expenditure upswings in good times and capital expenditure downswings in bad times? : new evidence from developing countries

Ardanaz, Martín; Izquierdo, Alejandro - 2017

This paper studies the cyclical properties of two key expenditure categories (current and public investment spending) during the different phases of the business cycle (good times and bad times). Anecdotal evidence suggests that policymakers usually cannot resist the temptation of spending more...

Persistent link: https://www.econbiz.de/10011784234

The cyclical behaviour of government spending for social protection : is the OECD methodology robust?

Arsenev, Aleksandr; Heimberger, Philipp; Schütz, Bernhard - 2023

Spending elasticities measure the reaction of different government spending components to the business cycle. They are important inputs for fiscal forecasts, and they are particularly relevant in the context of European Union (EU) fiscal rules, as elasticity estimates enter the estimation of...

Persistent link: https://www.econbiz.de/10014445966

Financial conditions and density forecasts for US output and inflation

Alessandri, Piergiorgio; Mumtaz, Haroon - 2014

When do financial markets help in predicting economic activity? With incomplete markets, the link between financial and real economy is state-dependent and financial indicators may turn out to be useful particularly in forecasting "tail" macroeconomic events. We examine this conjecture by...

Persistent link: https://www.econbiz.de/10010339756

Sticky wages, monetary policy and fiscal policy multipliers

Dupor, Bill; Li, Rong; Li, Jingchao - 2017

This paper demonstrates how adding nominal wage rigidity to a standard sticky price model can create a mechanism by which increases in government spending cause increases in consumption. The increase in output arising from government purchases puts upward pressure on the price level. At a fixed...

Persistent link: https://www.econbiz.de/10011691001

The role of institutional quality on the effects of fiscal stimulus

Avellán, Leopoldo; Galindo Andrade, Arturo José; … - 2020

This paper provides evidence on the effect of fiscal stimulus on economic activity in countries with different degrees of institutional quality. The identification strategy makes use of data on military expenditure to instrument government consumption using local lineal projections as presented...

Persistent link: https://www.econbiz.de/10012238283