Working Paper

Comment on Eggertsson, \"What fiscal policy is effective at zero interest rates?\"

Abstract: Gauti B. Eggertsson's paper (published in NBER Macroeconomics Annual 2010) represents an important contribution to the analysis of fiscal policy in the New Keynesian model when the zero lower bound on the nominal interest rate is binding. The paper accomplishes a great deal. It analyzes two types of taxes on capital and labor, the investment tax credit, a sales tax, and two types of government spending. It deserves to be an important reference on fiscal policy in a binding zero lower bound. In my discussion, I focus on the subset of Eggertsson's results that initially surprised me and that I think will surprise many other readers too.

Bibliographic Information

Provider: Federal Reserve Bank of Atlanta

Part of Series: FRB Atlanta CQER Working Paper

Publication Date: 2010

Number: 2010-06