Bredemeier, Christian ORCID: 0000-0002-7358-6992, Juessen, Falko and Schabert, Andreas
ORCID: 0000-0002-4924-9937
(2022).
Why are fiscal multipliers moderate even under monetary accommodation?
European Economic Review EER, 141.
p. 103970.
AMSTERDAM:
ELSEVIER.
ISSN 1873-572X
Abstract
Estimated fiscal multipliers for the US are typically moderate, despite evidence of the Fed lowering, rather than raising, interest rates after government spending hikes. We rationalize these puzzling observations building on the imperfect substitutability of assets. We find that interest rates important for private borrowing/saving do not follow the response of the monetary policy rate, which is reflected by rising liquidity premia after spending hikes. A model with a structural specification of asset liquidity can replicate these findings and predicts moderate output effects of fiscal expansions even when monetary policy rates fall or are fixed at the zero lower bound.
Item Type: | Journal Article | ||||||||||||||||
Creators: |
|
||||||||||||||||
URN: | urn:nbn:de:hbz:38-574445 | ||||||||||||||||
DOI: | 10.1016/j.euroecorev.2021.103970 | ||||||||||||||||
Journal or Publication Title: | European Economic Review EER | ||||||||||||||||
Volume: | 141 | ||||||||||||||||
Page Range: | p. 103970 | ||||||||||||||||
Date: | 2022 | ||||||||||||||||
Publisher: | ELSEVIER | ||||||||||||||||
Place of Publication: | AMSTERDAM | ||||||||||||||||
ISSN: | 1873-572X | ||||||||||||||||
Language: | English | ||||||||||||||||
Faculty: | Central Institutions / Interdisciplinary Research Centers | ||||||||||||||||
Divisions: | Weitere Institute, Arbeits- und Forschungsgruppen > Center for Macroeconomic Research (CMR) | ||||||||||||||||
Subjects: | Economics | ||||||||||||||||
Uncontrolled Keywords: |
|
||||||||||||||||
Refereed: | Yes | ||||||||||||||||
URI: | http://kups.ub.uni-koeln.de/id/eprint/57444 |
Downloads
Downloads per month over past year
Altmetric
Export
Actions (login required)
![]() |
View Item |