Federal Reserve Bank of Atlanta
FRB Atlanta Working Paper
Small and orthodox fiscal multipliers at the zero lower bound
Does fiscal policy have large and qualitatively different effects on the economy when the nominal interest rate is zero? An emerging consensus in the New Keynesian literature is that the answer is yes. New evidence provided here suggests that the answer is often no. For a broad range of empirically relevant parameterizations of the Rotemberg model of costly price adjustment, the government purchase multiplier is about one or less, and the response of hours to a tax cut is either negative or close to zero.
Cite this item
R. Anton Braun & Lena Mareen Korber & Yuichiro Waki, Small and orthodox fiscal multipliers at the zero lower bound, Federal Reserve Bank of Atlanta, FRB Atlanta Working Paper 2013-13, 01 Dec 2013.
- E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
- E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
Keywords: monetary policy; zero interest rate; fiscal multipliers
This item with handle RePEc:fip:fedawp:2013-13
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