Persistent Government Spending and Fiscal Multipliers: the Investment-Channel

Patrick Fève and Martial Dupaigne

No 408, 2016 Meeting Papers from Society for Economic Dynamics

Abstract: This paper inspects the mechanism shaping government spending multipliers in various small-scale DSGE setups with endogenous labor supply and capital accumulation. We analytically characterize the short-run investment multiplier, which in equilibrium can be either positive or negative. The investment multiplier increases with the persistence of the exogenous government spending process. The response of investment to government spending shocks strongly affects short-run multipliers on output and consumption.

Date: 2016
New Economics Papers: this item is included in nep-dge and nep-fdg
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Citations: View citations in EconPapers (19)

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Journal Article: Persistent government spending and fiscal multipliers: The investment-channel (2016)
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