EconPapers    
Economics at your fingertips  
 

Excess Savings and Twin Deficits: The Transmission of Fiscal Stimulus in Open Economies

Rishabh Aggarwal, Adrien Auclert, Matthew Rognlie and Ludwig Straub

No 17397, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We study the effects of debt-financed fiscal transfers in a general equilibrium, heterogeneous-agent model of the world economy. In the long run, increases in government debt anywhere raise the world interest rate and increase private wealth everywhere. In the short run, a country with a larger-than-average fiscal deficit experiences both a large increase in private savings (“excess savings†) and a small but persistent current account deficit (a slow-motion “twin deficit†). These patterns are consistent with the evolution of the world’s balance of payments since the beginning of the Covid pandemic.

Keywords: Distribution (search for similar items in EconPapers)
JEL-codes: E62 F32 F41 (search for similar items in EconPapers)
Date: 2022-06
References: Add references at CitEc
Citations:

Downloads: (external link)
https://cepr.org/publications/DP17397 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Journal Article: Excess Savings and Twin Deficits: The Transmission of Fiscal Stimulus in Open Economies (2023) Downloads
Chapter: Excess Savings and Twin Deficits: The Transmission of Fiscal Stimulus in Open Economies (2022) Downloads
Working Paper: Excess Savings and Twin Deficits: The Transmission of Fiscal Stimulus in Open Economies (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:cpr:ceprdp:17397

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP17397

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().

 
Page updated 2025-03-23
Handle: RePEc:cpr:ceprdp:17397