Motivated by the apparent failure of the credit multiplier mechanism (CM) to deliver amplification in DSGE models, we …

responses to an aggregate fiscal multiplier using a multi-region, New Keynesian model with heterogeneous agents, incomplete … markets, and trade linkages. Our model is consistent with the estimated positive local multiplier, a result that distinguishes … multiplier is twice as large as the local multiplier because trade linkages propagate the effect of government spending across …

spending by $0.29. We translate the regional consumption responses to an aggregate fiscal multiplier using a multi-region, New … multiplier, a result that distinguishes our incomplete markets model from models with complete markets. The aggregate consumption … multiplier is 0.64, which implies an output multiplier higher than one. The aggregate consumption multiplier is larger than the …

consumption and the government spending multiplier, given that consumption and labor are somewhat complementary. -- Trend growth … ; price and wage staggering ; government spending multiplier …

modestly negative long-run multipliers around -0.42. The multiplier is sensitive to the fraction of transfers given to credit …

-run multipliers around 0.52 and modestly negative long-run multipliers around -0.42. The multiplier is sensitive to the fraction of …