Can Government Spending Help to Escape Recessions?

Régis Barnichon, Davide Debortoli and Christian Matthes

FRBSF Economic Letter, 2021, vol. 2021, issue 02, 01-05

Abstract: A key to designing fiscal policy is understanding how government purchases affect economic output overall. Research suggests that expanding government spending is not very effective at stimulating an economy in normal times. However, in deep downturns when monetary policy is constrained at the zero lower bound, public spending is more potent and can become an effective way to escape a recession.

Keywords: fiscal policy; COVID-19; monetary policy (search for similar items in EconPapers)
Date: 2021
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