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Global policy at the Zero Lower Bound in a large-scale DSGE model

Sandra Gomes (), Pascal Jacquinot, Ricardo Mestre () and João Sousa ()

Working Papers from Banco de Portugal, Economics and Research Department

Abstract: The purpose of this paper is to analyse whether fiscal policies can alleviate the effects of the zero lower bound (ZLB) on interest rates and if they should be coordinated internationally. The analysis is carried out using EAGLE, a DSGE model of the global economy. We consider that the fiscal shocks are temporary and that fscal policy retains full credibility at all times. In this setup we find significant non-linearities in a ZLB situation that amplify theeffects of fiscal shocks compared to the non-ZLB case. International coordination is helpful but does not play a major role in the results.

JEL-codes: E52 E62 E63 F42 (search for similar items in EconPapers)
Date: 2010
New Economics Papers: this item is included in nep-cba, nep-dge, nep-mac and nep-mon
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Citations: View citations in EconPapers (8) Track citations by RSS feed

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Journal Article: Global policy at the zero lower bound in a large-scale DSGE model (2015) Downloads
Working Paper: Global policy at the zero lower bound in a large-scale DSGE model (2010) Downloads
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