Persistent Government Spending and Fiscal Multipliers: the Investment-Channel

Martial Dupaigne and Patrick Fève

No 16-655, TSE Working Papers from Toulouse School of Economics (TSE)

Abstract: This paper inspects the mechanism shaping government spending multipliers in various smallscale 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.

Keywords: Government Spending Multipliers; DSGE models; Capital Accumulation; Labor Supply; Market Imperfections (search for similar items in EconPapers)
JEL-codes: E32 E62 (search for similar items in EconPapers)
Date: 2016-05
New Economics Papers: this item is included in nep-dge, nep-fdg and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

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Related works:
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:tse:wpaper:30483

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