Persistent Government Spending and Fiscal Multipliers: the Investment-Channel
Patrick Fève and
Martial Dupaigne ()
No 408, 2016 Meeting Papers from Society for Economic Dynamics
This paper inspects the mechanism shaping government spending multipliers in various small-scale DSGE setups with endogenous labor supply and capital accumulation. We analytically characterize the short-run investment multiplier, which in equilibrium can be either positive or negative. The investment multiplier increases with the persistence of the exogenous government spending process. The response of investment to government spending shocks strongly affects short-run multipliers on output and consumption.
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Journal Article: Persistent government spending and fiscal multipliers: The investment-channel (2016)
Working Paper: Persistent Government Spending and Fiscal Multipliers: the Investment-Channel (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed016:408
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