The composition of government spending and the multiplier at the zero lower bound

Albertini, Julien; Poirier, Arthur; Roulleau-Pasdeloup, Jordan

doi:10.1016/j.econlet.2013.10.021

Cited by 20 publications

(16 citation statements)

References 11 publications

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“…For this figure only, I assume that the central 9. In Albertini, Poirier, and Roulleau-Pasdeloup (2014), we show that with this particular value, the spending increase essentially vanishes after 2 years, which is roughly consistent with the duration of the ARRA provisions. I will later on study the sensitivity of the results with respect to this parameter.…”

Section: Calibration and Solution Methodssupporting

confidence: 80%

The Government Spending Multiplier in a (Mis)Managed Liquidity Trap

Roulleau-Pasdeloup¹

2018

J of Money Credit Banking

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I study the impact of a government spending shock in a New Keynesian model when monetary policy is set optimally. In this framework, the economy is at the zero lower bound but expectations are well managed by the central bank. As such, the multiplier effect of government spending increases on expected inflation is close to zero while the one on output can be larger than one. This is consistent with recent empirical evidence on the effects of the 2009 American Recovery and Reinvestment Act.

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Section: Calibration and Solution Methodssupporting

confidence: 80%

The Government Spending Multiplier in a (Mis)Managed Liquidity Trap

Roulleau-Pasdeloup¹

2018

J of Money Credit Banking

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“… See Albertini, Poirier and Roulleau‐Pasdeloup () for an examination of short‐run fiscal multipliers for different components of government spending at the zero lower bound, based on a New Keynesian model. …”

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confidence: 99%

Does the Composition of Government Expenditure Matter for Long‐Run GDP Levels?

2015

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A note on versions:The version presented here may differ from the published version or from the version of record. If you wish to cite this item you are advised to consult the publisher's version. Please see the repository url above for details on accessing the published version and note that access may require a subscription. AbstractWe examine the long-run GDP impacts of changes in total government expenditure and in the shares of different spending categories for a sample of OECD countries since the 1970s, taking account of methods of financing expenditure changes and possible endogenous relationships. We provide more systematic empirical evidence than available hitherto for OECD countries, obtaining strong evidence that reallocating total spending towards infrastructure and education is positive for long-run output levels. Reallocating spending towards social welfare (and away from all other expenditure categories pro-rata) may be associated with modest negative effects on output in the long run.Word count: 11.961 JEL codes: H50; O40

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“…For empirical evidence on the productive government spending, see Bom and Ligthart (2014). of productive public services or public goods for production following Futagami, Iwaisako, and Ohdoi (2008), Kamiguchi and Tamai (2011), and Albertini, Poirier, and Roulleau-Pasdeloup (2014). However, the quantitative results of the two perspectives are similar.…”

Section: Environmentmentioning

confidence: 99%

“…The Bellman equation for a employed 15. Regarding this issue, see the working paper of Albertini, Poirier, and Roulleau-Pasdeloup (2014). 16.…”

Section: Environmentmentioning

confidence: 99%

The Heterogeneous Responses of Consumption between Poor and Rich to Government Spending Shocks

Ma¹

2018

J of Money Credit Banking

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Government spending shocks have substantially different effects on consumers across the income distribution: consumption increases for the poor whereas it decreases for the rich in response to a rise in government expenditure. I shed light on this issue by incorporating a progressive tax scheme and productive public expenditure into a heterogeneous agent model economy with indivisible labor. The model economy is able to successfully match aggregate and disaggregate effects of government spending shocks on consumption. When the government increases its spending and accompanies it by a rise in tax progressivity, the poor are employed and increase their consumption since after‐tax wage rates increase while the rich decrease their consumption because of a fall in after‐tax wage rates.

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The composition of government spending and the multiplier at the zero lower bound

Abstract: We investigate the size of the multiplier at the ZLB in a New keynesian model. It ranges from around -0.25 to +1.5, depending on the extent to which government spending is productive, substitutable or not for private consumption.

Cited by 20 publications

References 11 publications

The Government Spending Multiplier in a (Mis)Managed Liquidity Trap

The Government Spending Multiplier in a (Mis)Managed Liquidity Trap

Does the Composition of Government Expenditure Matter for Long‐Run GDP Levels?

The Heterogeneous Responses of Consumption between Poor and Rich to Government Spending Shocks

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