EconPapers    
Economics at your fingertips  
 

Fiscal spending multipliers over the household leverage cycle

Mathias Klein, Hamza Polattimur and Roland Winkler

Working Papers from University of Antwerp, Faculty of Business and Economics

Abstract: This paper investigates household leverage-dependent fiscal policy effects in a twoagent New Keynesian DSGE model with occasionally binding borrowing constraints. Our model successfully replicates empirical evidence showing that fiscal policy’s effectiveness differs significantly across the household leverage cycle. Fiscal multipliers are persistently above unity when government spending rises at the peak of the household leverage cycle. In contrast, increases in government spending at the trough of the household leverage cycle imply fiscal multipliers below unity. We test the model’s predictions on post-WWII U.S. data.

Keywords: Occasionally Binding Constraints; Government Spending Multiplier; Household Leverage Cycle; State-Dependence (search for similar items in EconPapers)
JEL-codes: E32 E44 E62 H31 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2020-11
New Economics Papers: this item is included in nep-dge and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://repository.uantwerpen.be/docstore/d:irua:3171 (application/pdf)

Related works:
Journal Article: Fiscal spending multipliers over the household leverage cycle (2022) Downloads
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:ant:wpaper:2020007

Access Statistics for this paper

More papers in Working Papers from University of Antwerp, Faculty of Business and Economics Contact information at EDIRC.
Bibliographic data for series maintained by Joeri Nys ().

 
Page updated 2024-07-20
Handle: RePEc:ant:wpaper:2020007