Time-Varying Fiscal Multipliers in an Agent-Based Model with Credit Rationing

Mauro Napoletano, Andrea Roventini and Jean-Luc Gaffard

LEM Papers Series from Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy

Abstract: We build an agent-based model populated by households with heterogenous and time-varying nancial conditions in order to study how scal multipliers can change over the business cycle and are aected by the state of credit markets. We nd that decit-spending scal policy dampens the eect of bankruptcy shocks and lowers their persistence. Moreover, the size and dynamics of government spending multipli- ers are related to the degree and persistence of credit rationing in the economy. On the contrary, in presence of balanced-budget rules, output permanently falls below pre-shock levels and the ensuing multipliers fall below one and are much lower than the ones emerging from the decit-spending policy. Finally, we show that dierent conditions in the credit market signicantly aect the size and the evolution of scal multipliers.

Keywords: fiscal multipliers; agent-based models; credit-rationing; balance-sheet recession; bankruptcy shocks (search for similar items in EconPapers)
Date: 2015-09-07
New Economics Papers: this item is included in nep-cmp, nep-hme and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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Related works:
Working Paper: Time-varying fiscal multipliers in an agent based model with credit-rationing (2017)
Working Paper: Time-varying fiscal multipliers in an agent based model with credit-rationing (2017)
Working Paper: Time-varying fiscal multipliers in an agent-based model with credit rationing (2017)
Working Paper: Time-Varying Fiscal Multipliers in an Agent-Based Model with Credit Rationing (2015)
Working Paper: Time varying fiscal multipliers in an agent-based model with credit rationing (2015)
Working Paper: Time varying fiscal multipliers in an agent-based model with credit rationing (2015)
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