New Keynesian versus old Keynesian government spending multipliers

John F. Cogan, Tobias Cwik, John Taylor and Volker Wieland

No 1090, Working Paper Series from European Central Bank

Abstract: Renewed interest in fiscal policy has increased the use of quantitative models to evaluate policy. Because of modelling uncertainty, it is essential that policy evaluations be robust to alternative assumptions. We find that models currently being used in practice to evaluate fiscal policy stimulus proposals are not robust. Government spending multipliers in an alternative empirically-estimated and widely-cited new Keynesian model are much smaller than in these old Keynesian models; the estimated stimulus is extremely small with GDP and employment effects only one-sixth as large. JEL Classification: C52, E62

Keywords: Fiscal multiplier; fiscal stimulus; government spending; Macroeconomic Modeling; new Keynesian model (search for similar items in EconPapers)
Date: 2009-09
New Economics Papers: this item is included in nep-cba, nep-fdg and nep-mac
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Citations: View citations in EconPapers (139)

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Related works:
Journal Article: New Keynesian versus old Keynesian government spending multipliers (2010)
Working Paper: New Keynesian versus old Keynesian government spending multipliers (2009)
Working Paper: New Keynesian versus Old Keynesian Government Spending Multipliers (2009)
Working Paper: New Keynesian Versus Old Keynesian Government Spending Multipliers (2009)
Working Paper: New Keynesian versus old Keynesian government spending multipliers (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:ecb:ecbwps:20091090

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