Outside the corridor: fiscal multipliers and business cycles into an agent based models with liquidity constraints

Mauro Napoletano, Jean-Luc Gaffard and Andrea Roventini

Working Papers from HAL

Abstract: We build an agent-based model to study how _scal multipliers can change over the business cycle. Our approach considers the economy as a complex evolving system. In that, _scal state-dependent multipliers are emergent disequilibrium phenomenon stemming from the interaction among an ecology of heterogeneous agents. We study _scal multipliers in response to di_erent microeconomic shocks hitting the economy. We show that de_cit-spending _scal policy dampens the e_ect of a shock and lowers its persistence. Moreover, we show that the size and dynamics of the _scal multi- plier is inversely related to the evolution of credit rationing in the aftermath of the shock. We also investigate the e_ects of two di_erent balanced budget rules. In the _rst type of such experiments, government expenditure is constrained to be equal to tax revenues of each period. In the second one the tax rate is eventually raised to balance a given level of government expenditure. We show that _scal multipliers are very low with both balanced-budget rules. Finally, we show that _scal multipliers are higher into more leveraged economies.

Keywords: keynesian economics; fiscal multipliers; corridor effects; agent based models; liquidity constraints (search for similar items in EconPapers)
Date: 2014-09
New Economics Papers: this item is included in nep-mac
Note: View the original document on HAL open archive server: https://sciencespo.hal.science/hal-01063367v1
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://sciencespo.hal.science/hal-01063367v1/document (application/pdf)

Related works:
Working Paper: Outside the corridor: fiscal multipliers and business cycles into an agent-based model with liquidity constraints (2014)
Working Paper: Outside the corridor: fiscal multipliers and business cycles into an agent based models with liquidity constraints (2014)
Working Paper: Outside the corridor: fiscal multipliers and business cycles into an agent-based model with liquidity constraints (2014)
Working Paper: Outside the corridor: fiscal multipliers and business cycles into an agent-based model with liquidity constraints (2014)
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:hal:wpaper:hal-01063367

Access Statistics for this paper

More papers in Working Papers from HAL
Bibliographic data for series maintained by CCSD ().