probability of macroeconomic catastrophes à la Barro (2006), and to the case of an uncertain trend or volatility of growth à la …

for time-varying volatility. We then feed these processes into an otherwise standard New Keynesian business cycle model … calibrated to the U.S. economy. We find that fiscal volatility shocks have an adverse effect on economic activity that is …

.S. that allow for time-varying volatility. They then feed these processes into an otherwise standard New Keynesian business … cycle model calibrated to the U.S. economy. The authors find that fiscal volatility shocks have an adverse effect on …