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Some unpleasant properties of loglinearized solutions when the nominal rate is zero

R. Braun, Lena Mareen Korber and Yuichiro Waki
Authors registered in the RePEc Author Service: Lena Boneva

No 2012-05, FRB Atlanta Working Paper from Federal Reserve Bank of Atlanta

Abstract: Does fiscal policy have large and qualitatively different effects on the economy when the nominal interest rate is zero? An emerging consensus in the New Keynesian (NK) literature is that the answer to this question is yes. Evidence presented here suggests that the NK model's implications for fiscal policy at the zero bound may not be all that different from its implications for policy away from it. For a range of empirically relevant parameterizations, employment increases when the labor tax rate is cut and the government purchase multiplier is less than 1.05.

Keywords: zero lower bound; fiscal policy; New Keynesian models (search for similar items in EconPapers)
JEL-codes: E52 E62 (search for similar items in EconPapers)
Pages: 69 pages
Date: 2012
New Economics Papers: this item is included in nep-cba, nep-dge and nep-mac
References: Add references at CitEc
Citations: View citations in EconPapers (85)

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Related works:
Journal Article: Some unpleasant properties of loglinearized solutions when the nominal rate is zero (2016) Downloads
Working Paper: Some Unpleasant Properties of Loglinearized Solutions When the Nominal Rate is Zero (2015) Downloads
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