Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/223198
Authors: 
Ettmeier, Stephanie
Kriwoluzky, Alexander
Year of Publication: 
2020
Series/Report no.: 
Working Papers of the Priority Programme 1859 "Experience and Expectation. Historical Foundations of Economic Behaviour" No. 17
Abstract: 
We reexamine whether pre-Volcker U.S. fiscal policy was active or passive. To do so, we estimate a DSGE model with monetary and fiscal policy interactions employing a sequential Monte Carlo algorithm (SMC) for posterior evaluation. Unlike existing studies, we do not have to treat each policy regime as distinct, separately estimated, models. Rather, SMC enables us to estimate the DSGE model over its entire parameter space. A differentiated perspective results: pre-Volcker macroeconomic dynamics were similarly driven by a passive monetary/passive fiscal policy regime and fiscal dominance. Fiscal policy actions, especially government spending, were critical in the pre-Volcker inflation build-up.
Subjects: 
Bayesian Analysis
DSGE Models
Monetary-Fiscal Policy Interactions
MonteCarlo Methods
JEL: 
C11
C15
E63
E65
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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