Unconventional Fiscal Policy at the Zero Bound

Isabel Correia (), Emmanuel Farhi, Juan Pablo Nicolini and Pedro Teles

No 16758, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: When the zero lower bound on nominal interest rates binds, monetary policy cannot provide appropriate stimulus. We show that in the standard New Keynesian model, tax policy can deliver such stimulus at no cost and in a time-consistent manner. There is no need to use inefficient policies such as wasteful public spending or future commitments to inflate. We conclude that in the New Keynesian model, the zero bound on nominal interest rates is not a relevant constraint on both fiscal and monetary policy.

JEL-codes: E12 E52 E58 E6 E62 (search for similar items in EconPapers)
Date: 2011-02
Note: EFG ME
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

Published as Isabel Correia & Emmanuel Farhi & Juan Pablo Nicolini & Pedro Teles, 2013. "Unconventional Fiscal Policy at the Zero Bound," American Economic Review, American Economic Association, vol. 103(4), pages 1172-1211, June.

Downloads: (external link)
http://www.nber.org/papers/w16758.pdf (application/pdf)

Related works:
Journal Article: Unconventional Fiscal Policy at the Zero Bound (2013)
Working Paper: Unconventional fiscal policy at the zero bound (2012)
Working Paper: Unconventional Fiscal Policy at the Zero Bound (2011)
Working Paper: Unconventional Fiscal Policy at the Zero Bound (2011)
Working Paper: Unconventional Fiscal Policy at the Zero Bound
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:16758

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w16758

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().