During a fiscal stimulus, does it matter, for the size of the government spending multiplier, which category of agents bears the brunt of the current and/or future adjustment in taxes? In an economy with heterogeneous agents and imperfect financial markets, the answer depends on whether or not...

With perfect credit markets, any (lump-sum) tax redistribution is neutral. We study the e¤ects of a tax redistribution in an economy with heterogenous agents and borrowing constraints. Under ?exible prices, a tax redistribution that favors "the poor" (i.e., the credit constrained) is neutral,...

We estimate the effects of government spending shocks on the CPI real exchange rate, the trade balance and their co-movements with GDP and private consumption. We decompose the variations of the CPI real exchange rate into variations of the traded goods real exchange rate and the relative price...

We estimate the effects of fiscal policy on the labor market in US data. An increase in government spending of 1 percent of GDP generates output and unemployment multipliers, respectively, of about 1.2 percent (at one year) and 0.6 percentage points (at the peak). Each percentage point increase...

In a seminal contribution, Romer and Romer (2010) (RR henceforth) estimate GDP tax multipliers of up to -3 after 3 years. These results have been criticized as implausibly large. For instance, Favero and Giavazzi (2010) (FG henceforth) argue RR's specification cannot be interpreted as a proper...

In a seminal contribution, Romer and Romer (2010) introduce a new dataset of exogenous tax changes and estimate a tax multiplier at 3 years of about -3. These results have been criticized as implausibly large. In this paper, I argue that on theoretical grounds the discretionary component of...

Government spending at the zero lower bound (ZLB) is not necessarily welfare enhancing, even when its output multiplier is large. We illustrate this point in the context of a standard New Keynesian model. In that model, when government spending provides direct utility to the household, its...

In this paper, we present our view of the recent evolution of European integration. We first briefly describe the main features of the institution and decision making process in the European Union, with particular attention to the debate between federalists and super nationalists. We then...