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

Lena Boneva, R. Braun and Yuichiro Waki

Journal of Monetary Economics, 2016, vol. 84, issue C, 216-232

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 model (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (93)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0304393216301143
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Some Unpleasant Properties of Loglinearized Solutions When the Nominal Rate is Zero (2015)
Working Paper: Some unpleasant properties of loglinearized solutions when the nominal rate is zero (2012)
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:eee:moneco:v:84:y:2016:i:c:p:216-232

DOI: 10.1016/j.jmoneco.2016.10.012

Access Statistics for this article

Journal of Monetary Economics is currently edited by R. G. King and C. I. Plosser

More articles in Journal of Monetary Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().