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Government Spending Multipliers Under the Zero Lower Bound: Evidence from Japan

Wataru Miyamoto (), Thuy Lan Nguyen and Dmitriy Sergeyev

Staff Working Papers from Bank of Canada

Abstract: Using a rich data set on government spending forecasts in Japan, we provide new evidence on the effects of unexpected changes in government spending when the nominal interest rate is near the zero lower bound (ZLB). The on-impact output multiplier is 1.5 in the ZLB period, and 0.6 outside of it. We estimate that government spending shocks increase both private consumption and investment during the ZLB period but crowd them out in the normal period. There is evidence that expected inflation increases by more in the ZLB period than in the normal period.

Keywords: Economic models; Fiscal Policy (search for similar items in EconPapers)
JEL-codes: E32 E5 E62 (search for similar items in EconPapers)
Pages: 55 pages
Date: 2017
New Economics Papers: this item is included in nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9) Track citations by RSS feed

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https://www.bankofcanada.ca/wp-content/uploads/2017/09/swp2017-40.pdf

Related works:
Journal Article: Government Spending Multipliers under the Zero Lower Bound: Evidence from Japan (2018) Downloads
Working Paper: Government Spending Multipliers under the Zero Lower Bound: Evidence from Japan (2016) Downloads
Working Paper: Government Spending Multipliers under the Zero Lower Bound: Evidence from Japan (2016) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:bca:bocawp:17-40

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