Can Government Spending Help to Escape Recessions?

RePEc Short ID: pba542
ORCID iD: 0000-0003-3967-1453

Barnichon, Régis; Debortoli, Davide; Matthes, Christian

Journal Article

Can Government Spending Help to Escape Recessions?

Abstract: A key to designing fiscal policy is understanding how government purchases affect economic output overall. Research suggests that expanding government spending is not very effective at stimulating an economy in normal times. However, in deep downturns when monetary policy is constrained at the zero lower bound, public spending is more potent and can become an effective way to escape a recession.

Keywords: fiscal policy; COVID-19; monetary policy;