American Economic Journal:
Macroeconomics
ISSN 1945-7707 (Print) | ISSN 1945-7715 (Online)
Effects of Fiscal Stimulus in Structural Models
American Economic Journal: Macroeconomics
vol. 4,
no. 1, January 2012
(pp. 22–68)
Abstract
The paper subjects seven structural DSGE models, all used heavily by policymaking institutions, to discretionary fiscal stimulus shocks using seven different fiscal instruments, and compares the results to those of two prominent academic DSGE models. There is considerable agreement across models on both the absolute and relative sizes of different types of fiscal multipliers. The size of many multipliers is large, particularly for spending and targeted transfers. Fiscal policy is most effective if it has moderate persistence and if monetary policy is accommodative. Permanently higher spending or deficits imply significantly lower initial multipliers. (JEL E12, E13, E52, E62)Citation
Coenen, Günter, Christopher J. Erceg, Charles Freedman, Davide Furceri, Michael Kumhof, René Lalonde, Douglas Laxton, Jesper Lindé, Annabelle Mourougane, Dirk Muir, Susanna Mursula, Carlos de Resende, John Roberts, Werner Roeger, Stephen Snudden, Mathias Trabandt, and Jan in't Veld. 2012. "Effects of Fiscal Stimulus in Structural Models." American Economic Journal: Macroeconomics, 4 (1): 22–68. DOI: 10.1257/mac.4.1.22Additional Materials
JEL Classification
- E12 General Aggregative Models: Keynes; Keynesian; Post-Keynesian
- E13 General Aggregative Models: Neoclassical
- E52 Monetary Policy
- E62 Fiscal Policy
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