The government spending multiplier in the Heterogeneous Agent New Keynesian model

Paweł Kopiec ()

European Economic Review, 2022, vol. 145, issue C

Abstract: This paper provides an analytical decomposition of the fiscal multiplier in the Heterogeneous Agent New Keynesian model. The derived expression consists of interpretable, model-based channels through which private consumption propagates government spending shocks. The calibrated model is used to estimate the magnitude of multipliers and their structure under alternative fiscal and monetary rules. The derived formula is compared to its representative agent limit to articulate the role of household heterogeneity in the transmission of government spending shocks. A two-agent version of the model is investigated to explore the consequences of cyclical inequality for the propagation of fiscal expenditures.

Keywords: Heterogeneous Agents; Fiscal stimulus (search for similar items in EconPapers)
JEL-codes: D30 E62 H23 H30 H31 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:145:y:2022:i:c:s0014292122000617

DOI: 10.1016/j.euroecorev.2022.104125

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