Unconventional Fiscal Policy at the Zero Bound

Pedro Teles and Emmanuel Farhi
Authors registered in the RePEc Author Service: Isabel Correia () and Juan Pablo Nicolini

Working Papers from Banco de Portugal, Economics and Research Department

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: E31 E40 E52 E58 E62 E63 (search for similar items in EconPapers)
Date: 2011
New Economics Papers: this item is included in nep-cba and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)

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https://www.bportugal.pt/sites/default/files/anexos/papers/wp201103.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
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Persistent link: https://EconPapers.repec.org/RePEc:ptu:wpaper:w201103

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