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adjustment, the government purchase multiplier is about one or less, and the response of hours to a tax cut is either negative or …
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At the zero lower bound (ZLB), expectations about the future path of monetary or fiscal policy are crucial. We model expectations formation under level-k thinking, a form of bounded rationality introduced by García-Schmidt and Woodford (2019) and Farhi and Werning (2017), consistent with...
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We calculate the magnitude of the government consumption multiplier in linearized and nonlinear solutions of a New … that the nonlinear solution is associated with a much smaller multiplier than the linearized solution in long …
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