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dc.contributor.authorStrulik, Holgeren_US
dc.contributor.authorTrimborn, Timoen_US
dc.date.accessioned2009-07-20en_US
dc.date.accessioned2010-08-03T13:10:46Z-
dc.date.available2010-08-03T13:10:46Z-
dc.date.issued2009en_US
dc.identifier.urihttp://hdl.handle.net/10419/37123-
dc.description.abstractCan a large-scale defcit spending program speed up recovery after recession? To answer that question we calibrate a standard neoclassical growth model with US data and assume that an exogenous shock has driven aggregate output far below steady-state level. We calibrate the model such that a permanent increase of government expenditure is effective in raising output. We then show that 'fiscal stimulus', i.e. a temporary increase of government expenditure is not only ineffective but detrimental. Even before the spending program expires, aggregate output is lower than it could be without fiscal stimulus. We show the generality of this result w.r.t. size and persistence of the shock, size of the government spending multiplier, and the scale and duration of the stimulus program. Using a phase diagram we provide the economic intuition for our unpleasant finding and explain why, generally, private capital stock reaches its lowest level when a deficit spending program expires. We also show how an accompanying temporary cut of capital income taxes helps to prevent the negative repercussion of deficit spending on economic recovery.en_US
dc.language.isoengen_US
dc.publisherWirtschaftswiss. Fak., Leibniz Univ. Hannoveren_US
dc.relation.ispartofseriesDiscussion papers // School of Economics and Management of the Hanover Leibniz University 421en_US
dc.subject.jelE60en_US
dc.subject.jelH30en_US
dc.subject.jelH50en_US
dc.subject.jelO40en_US
dc.subject.ddc330en_US
dc.subject.keyworddeficit spendingen_US
dc.subject.keywordgovernment spending multiplieren_US
dc.subject.keywordeconomic recoveryen_US
dc.subject.keywordeconomicen_US
dc.subject.keywordgrowth.en_US
dc.subject.stwAntizyklische Finanzpolitiken_US
dc.subject.stwFinanzpolitiken_US
dc.subject.stwSchocken_US
dc.subject.stwMultiplikatoren_US
dc.subject.stwWirkungsanalyseen_US
dc.subject.stwWachstumstheorieen_US
dc.subject.stwInvestitionen_US
dc.subject.stwNeoklassiken_US
dc.subject.stwTheorieen_US
dc.subject.stwUSAen_US
dc.titleFiscal stimulus: A neoclassical perspectiveen_US
dc.typeWorking Paperen_US
dc.identifier.ppn605018731en_US
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungen-
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