What Accounts for the Change in U.S. Fiscal Policy Transmission?

Florin Bilbiie, Gernot Mueller and Andre Meier
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Gernot Mueller: Universität Bonn = University of Bonn
Authors registered in the RePEc Author Service: Gernot J. Müller

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Abstract: Using vector autoregressions on U.S. time series for 1957-79 and 1983-2004, we find government spending shocks to have stronger effects on output, consumption, and wages in the earlier period. We try to account for this observation within a DSGE model featuring price rigidities and limited asset market participation. Specifically, we estimate the structural parameters of the model for both periods by matching impulse responses. Model-based counterfactual experiments suggest that most of the changes in fiscal policy transmission are accounted for by increased asset market participation and the more active monetary policy of the Volcker-Greenspan period.

Keywords: government spending; asset market participation; fiscal policy; monetary policy; DSGE; vector autoregression; minimum distance estimation (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (36)

Published in Journal of Money, Credit and Banking, 2008, 40 (7), pp.1439-1470. ⟨10.1111/j.1538-4616.2008.00166.x⟩

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Journal Article: What Accounts for the Changes in U.S. Fiscal Policy Transmission? (2008)
Journal Article: What Accounts for the Changes in U.S. Fiscal Policy Transmission? (2008)
Working Paper: What Accounts for the Change in U.S. Fiscal Policy Transmission? (2008)
Working Paper: What accounts for the changes in U.S. fiscal policy transmission? (2006)
Working Paper: What Accounts for the Change in U.S Fiscal Policy Transmission ? (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-00622867

DOI: 10.1111/j.1538-4616.2008.00166.x

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