Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/202850
Authors: 
Punzo, Chiara
Rossi, Lorenza
Year of Publication: 
2019
Series/Report no.: 
Working Paper No. 76
Abstract: 
This paper analyzes the redistributive channel of a money financed fiscal stimulus (MFFS). It shows that the way in which this regime is implemented is crucial to determine its redistributive effects and consequently its effectiveness. In normal times, the most effective regime is a MFFS with no additional intervention by the Central Bank to stabilize the real public debt using inflation, whereas a MFFS accompanied by real debt stabilization - through the adjustment of seigniorage - is the most effective one in a ZLB scenario. In a TANK model this regime is so effective to avoid the recessionary effects implied by the ZLB. This result does not hold in a RANK model, where the redistributive channel is absent. Remarkably, contrary to the common wisdom a MFFS is followed by a moderate increase of inflation, which is only temporarily higher than the target.
Subjects: 
Money-Financed fiscal stimulus
seignorage
government spending
redistribution
borrower-saver
fiscal multipliers
welfare
RANK versus TANK
JEL: 
E32
E52
E62
Document Type: 
Working Paper

Files in This Item:
File
Size
831.41 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.