When is the government spending multiplier large?

Lawrence Christiano, Martin Eichenbaum and Sergio Rebelo ()

No 2010-01, FRB Atlanta CQER Working Paper from Federal Reserve Bank of Atlanta

Abstract: We argue that the government spending multiplier can be very large when the nominal interest rate is constant. We focus on a natural case in which the interest rate is constant, which is when the zero lower bound on nominal interest rates binds. For the economies that we consider it is optimal to increase government spending in response to shocks that make the zero bound binding.

Date: 2010
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Related works:
Journal Article: When Is the Government Spending Multiplier Large? (2011)
Working Paper: When is the government spending multiplier large? (2009)
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