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An Analytical Characterization of Noisy Fiscal Policy

Patrick Fève, Tannous Kass-Hanna and Mario Pietrunti ()

No 16-696, TSE Working Papers from Toulouse School of Economics (TSE)

Abstract: This paper provides an analytical characterization of the effects of noisy news shocks on fiscal policy. We consider a small-scale Dynamic Stochastic General Equilibrium (DSGE) model with capital accumulation and endogenous labor supply and show that noise dampens the propagation of anticipated fiscal policy over the business cycle, thus reducing the fiscal multiplier.

Keywords: Government spending shocks; Expected shocks; Noisy Information; DSGE Models (search for similar items in EconPapers)
JEL-codes: C32 E62 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge and nep-mac
Date: 2016-09
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