Replication data for: Is Government Spending at the Zero Lower Bound Desirable?
Principal Investigator(s): View help for Principal Investigator(s) Florin O. Bilbiie; Tommaso Monacelli; Roberto Perotti
Version: View help for Version V1
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| Figure10 | 12/07/2019 02:23:PM | ||
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Project Description
Summary:
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We build a medium-scale DSGE model and calibrate it to fit the main macroeconomic variables during the US Great Recession. Using it to evaluate the welfare effects of increasing government consumption at the zero lower bound beyond what was actually observed in the data, we reach three main results. First, the increase in government consumption after 2008, albeit small in present value terms, was close to optimal. Second, frontloading the same stimulus would have been welfare-improving. Third, larger welfare effects occur in our model for parameter values implying either large welfare costs of modest recessions (e.g., high consumption curvature), or outright large recessions.
Scope of Project
JEL Classification:
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E12 General Aggregative Models: Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
E32 Business Fluctuations; Cycles
E43 Interest Rates: Determination, Term Structure, and Effects
E62 Fiscal Policy
H50 National Government Expenditures and Related Policies: General
E12 General Aggregative Models: Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
E32 Business Fluctuations; Cycles
E43 Interest Rates: Determination, Term Structure, and Effects
E62 Fiscal Policy
H50 National Government Expenditures and Related Policies: General
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