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American Economic Journal: Macroeconomics: Vol. 4 No. 1 (January 2012)

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Effects of Fiscal Stimulus in Structural Models

Article 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.4.1.22

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)

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Authors

Coenen, Günter (European Central Bank)
Erceg, Christopher J. (Federal Reserve Board)
Freedman, Charles (Carleton University)
Furceri, Davide (University of Palermo)
Kumhof, Michael (International Monetary Fund)
Lalonde, René (Bank of Canada)
Laxton, Douglas (International Monetary Fund)
Lindé, Jesper (Federal Reserve Board)
Mourougane, Annabelle (OECD)
Muir, Dirk (International Monetary Fund)
Mursula, Susanna (International Monetary Fund)
de Resende, Carlos (Bank of Canada)
Roberts, John (Federal Reserve Board)
Roeger, Werner (DG ECFIN, European Commission)
Snudden, Stephen (International Monetary Fund)
Trabandt, Mathias (European Central Bank)
in't Veld, Jan (DG ECFIN, European Commission)

JEL Classifications

E12: General Aggregative Models: Keynes; Keynesian; Post-Keynesian
E13: General Aggregative Models: Neoclassical
E52: Monetary Policy
E62: Fiscal Policy

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