Farhi, E.; Werning, I. - In: Handbook of macroeconomics : volume 2, v. 2A-2B SET, (pp. 2417-2492). 2016
We provide explicit solutions for government spending multipliers during a liquidity trap and within a fixed exchange regime using standard closed and open-economy New Keynesian models. We confirm the potential for large multipliers during liquidity traps. For a currency union, we show that...