The Government Spending Multiplier in a (Mis)Managed Liquidity Trap

Jordan Roulleau‐pasdeloup
Authors registered in the RePEc Author Service: Jordan Roulleau-Pasdeloup

Journal of Money, Credit and Banking, 2018, vol. 50, issue 2-3, 293-315

Abstract: I study the impact of a government spending shock in a New Keynesian model when monetary policy is set optimally. In this framework, the economy is at the zero lower bound but expectations are well managed by the central bank. As such, the multiplier effect of government spending increases on expected inflation is close to zero while the one on output can be larger than one. This is consistent with recent empirical evidence on the effects of the 2009 American Recovery and Reinvestment Act.

Date: 2018
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Citations: View citations in EconPapers (3)

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https://doi.org/10.1111/jmcb.12461

Related works:
Working Paper: The Government Spending Multiplier in a (Mis-)Managed Liquidity Trap (2017)
Working Paper: The Government Spending Multiplier in a (Mis-)Managed Liquidity Trap (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:wly:jmoncb:v:50:y:2018:i:2-3:p:293-315

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