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http://hdl.handle.net/10419/45806
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| Title: | | Fiscal stimulus and distortionary taxation  |
| Authors: | | Drautzburg, Thorsten Uhlig, Harald |
| Issue Date: | | 2011 |
| Series/Report no.: | | ZEW Discussion Papers 11-037 |
| Abstract: | | We quantify the fiscal multipliers in response to the American Recovery and Reinvestment Act (ARRA) of 2009. We extend the benchmark Smets-Wouters (Smets and Wouters, 2007) New Keynesian model, allowing for credit-constrained households, the zero lower bound, government capital and distortionary taxation. The posterior yields modestly positive short-run multipliers around 0.52 and modestly negative long-run multipliers around -0.42. The multiplier is sensitive to the fraction of transfers given to credit-constrained households, the duration of the zero lower bound and the capital. The stimulus results in negative welfare effects for unconstrained agents. The constrained agents gain, if they discount the future substantially. |
| Subjects: | | Fiscal Stimulus New Keynesian model liquidity trap zero lower bound fiscal multiplier |
| JEL: | | E62 E63 E65 H20 H62 |
| Persistent Identifier of the first edition: | | urn:nbn:de:bsz:180-madoc-31881 |
| Document Type: | | Working Paper |
| Appears in Collections: | | Publikationen von Forscherinnen und Forschern des ZEW ZEW Discussion Papers
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