The Effects of a Money-Financed Fiscal Stimulus

Jordi Galí

No 26249, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: I analyze the effects of a money-financed fiscal stimulus and compare them with those resulting from a conventional debt-financed stimulus. I study the effects of both a tax cut and an increase in government purchases, with and without a binding zero lower bound (ZLB) on the nominal interest rate. When the ZLB is not binding, a money-financed fiscal stimulus is shown to have much larger multipliers than a debt-financed fiscal stimulus. That difference in effectiveness persists, but is much smaller, under a binding ZLB. Nominal rigidities are shown to play a major role in shaping those effects

JEL-codes: E32 E52 E62 (search for similar items in EconPapers)
Date: 2019-09
New Economics Papers: this item is included in nep-dge and nep-mac
Note: EFG ME
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Published as Jordi Galí, 2019. "The effects of a money-financed fiscal stimulus," Journal of Monetary Economics, .

Downloads: (external link)
http://www.nber.org/papers/w26249.pdf (application/pdf)

Related works:
Journal Article: The effects of a money-financed fiscal stimulus (2020)
Working Paper: The Effects of a Money-Financed Fiscal Stimulus (2015)
Working Paper: The Effects of a Money-Financed Fiscal Stimulus (2014)
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:26249

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w26249

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 ().