Should the Fiscal Authority Avoid Implementation Lag?

Masataka Eguchi, Hidekazu Niwa and Takayuki Tsuruga

Oxford Bulletin of Economics and Statistics, 2024, vol. 86, issue 4, 856-870

Abstract: Implementation lags are a concern of policymakers as they may reduce the efficacy of fiscal policy. Using a standard New Keynesian model with an effective lower bound on the nominal interest rate, we compare the impacts of fiscal stimulus on output across various lengths of implementation lag. We show that despite concerns among policymakers, implementation lags may enhance the efficacy of government purchases on output when the economy is caught in a liquidity trap.

Date: 2024
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https://doi.org/10.1111/obes.12604

Related works:
Working Paper: Should the Fiscal Authority Avoid Implementation Lag? (2024)
Working Paper: Should the Fiscal Authority Avoid Implementation Lag? (2024)
Working Paper: Should the Fiscal Authority Avoid Implementation Lag? (2022)
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