The paper analyses the effectiveness of fiscal tools at the zero lower bound (ZLB). A non-linear New Keynesian DSGE model with occasionally binding constraints on monetary policy and borrowing is applied. When the ZLB binds in a liquidity trap, government spending becomes more effective in...

This paper traces the evolution of John Maynard Keynes's theory of the business cycle from his early writings in 1913 to his policy prescriptions for the control of fluctuations in the early 1940s. The paper identifies six different "theories" of business fluctuations. With different theoretical...

This paper traces the evolution of John Maynard Keynes's theory of the business cycle from his early writings in 1913 to his policy prescriptions for the control of fluctuations in the early 1940s. The paper identifies six different "theories" of business fluctuations. With different theoretical...

Systemic risk must include the housing market, though economists have not generally focused on it. We begin construction of an agent-based model of the housing market with individual data from Washington, DC. Twenty years of success with agent-based models of mortgage prepayments give us hope...

Systemic risk must include the housing market, though economists have not generally focused on it. We begin construction of an agent-based model of the housing market with individual data from Washington, DC. Twenty years of success with agent-based models of mortgage prepayments give us hope...

Forward guidance as a tool of unconventional monetary policy can be highly efficient to support aggregate demand and to steer the economy out of the zero lower bound (ZLB). However, the effect that stimulates the economy can give rise to a time-inconsistency problem: if the central bank promises...

The current Covid-19 Crisis 2020 has hit the Eurozone in a highly fragile situation, with a weak and asymmetric recovery from the Great Financial Crisis, the Great Recession and the following Eurozone Crisis. These crises have also revealed the weaknesses of the macroeconomic policy institutions...

This article considers the current economic situation from the lens of modern money theory (MMT) and expresses a policy response rooted in post-Keynesian theory and empirical data for the US and the euro area. First, MMT supports targeted deficit spending to promote production. Increasing...

Effects of fiscal policy on macroeconomic variables during 1973-93 are analysed using a disaggregated macroeconometric model of the Norwegian economy. Fiscal policy is measured as deviations from estimated trends for disaggregated policy variables. The policy effects are related to the cyclical...

Effects of fiscal policy on macroeconomic variables during 1973-93 are analysed using a disaggregated macroeconometric model of the Norwegian economy. Fiscal policy is measured as deviations from estimated trends for disaggregated policy variables. The policy effects are related to the cyclical...