Old-Keynesianism in the New Keynesian Model

Christiaan Kwaak ()
Additional contact information
Christiaan Kwaak: University of Groningen

De Economist, 2024, vol. 172, issue 3, No 2, 167-232

Abstract: Abstract I investigate an ‘old Keynesian’ fiscal policy in which government spending endogenously responds to inflation and the output gap when the nominal interest rate is pegged at the ZLB. I do so within a standard Representative Agent New Keynesian model (RANK), as well as a two-period Overlapping Generations New Keynesian model (OLG-NK). For both model versions, I find that the equilibrium values for inflation and the output gap under a standard Taylor rule regime can be replicated under the ‘old Keynesian’ regime. However, a unique stable countercyclical equilibrium is only feasible within the OLG-NK model and crucially depends on the pension system.

Keywords: Monetary policy; Fiscal policy; Zero lower bound; Old-Keynesianism (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s10645-024-09437-3 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
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:kap:decono:v:172:y:2024:i:3:d:10.1007_s10645-024-09437-3

Ordering information: This journal article can be ordered from
http://www.springer. ... cs/journal/10645/PS2

DOI: 10.1007/s10645-024-09437-3

Access Statistics for this article

De Economist is currently edited by Rob Alessie, Bas ter Weel, Casper van Ewijk, Jan C. van Ours and Frank de Jong

More articles in De Economist from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().