New Keynesian Versus Old Keynesian Government Spending Multipliers

John Cogan (), Tobias Cwik, John Taylor and Volker Wieland
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John Cogan: Hoover Institute, Stanford University

No 08-030, Discussion Papers from Stanford Institute for Economic Policy Research

Abstract: Renewed interest in fiscal policy has increased the use of quantitative models to evaluate policy. Because of modelling uncertainty, it is essential that policy evaluations be robust to alternative assumptions. We find that models currently being used to evaluate fiscal policy stimulus proposals are not robust. Government spending multipliers in an alternative empirically-estimated and widely-cited new Keynesian model are much smaller than in these old Keynesian models; the estimated stimulus is extremely small with GDP and employment effects only one-sixth as large and with private sector employment impacts likely to be even smaller.

Keywords: Keynesianism; fiscal policy; fiscal stimulus; multiplier (search for similar items in EconPapers)
JEL-codes: E12 E17 (search for similar items in EconPapers)
Date: 2009-02
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Citations: View citations in EconPapers (199)

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Related works:
Journal Article: New Keynesian versus old Keynesian government spending multipliers (2010)
Working Paper: New Keynesian versus old Keynesian government spending multipliers (2009)
Working Paper: New Keynesian versus old Keynesian government spending multipliers (2009)
Working Paper: New Keynesian versus Old Keynesian Government Spending Multipliers (2009)
Working Paper: New Keynesian versus old Keynesian government spending multipliers (2009)
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