Should the Fiscal Authority Avoid Implementation Lag?

Masataka Eguchi, Hidekazu Niwa and Takayuki Tsuruga

CAMA Working Papers from Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University

Abstract: Implementation lags are a concern of policymakers as they may reduce the efficacy of fiscal policy. Using a standard New Keynesian model with an effective lower bound on the nominal interest rate, we compare the impacts of fiscal stimulus on output across various lengths of implementation lag. We show that despite concerns among policymakers, implementation lags may enhance the efficacy of government purchases on output when the economy is caught in a liquidity trap.

Keywords: fiscal multiplier; effective lower bound; government spending; liquidity trap (search for similar items in EconPapers)
JEL-codes: E32 E52 E62 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2024-01
New Economics Papers: this item is included in nep-dge
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Citations: View citations in EconPapers (1)

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https://cama.crawford.anu.edu.au/sites/default/fil ... chi_niwa_tsuruga.pdf (application/pdf)

Related works:
Journal Article: Should the Fiscal Authority Avoid Implementation Lag? (2024)
Working Paper: Should the Fiscal Authority Avoid Implementation Lag? (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:een:camaaa:2024-02

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