Effects of Fiscal Stimulus in Structural Models

By Guenter Coenen, C. Erceg, C. Freedman, Davide Furceri, Michael Kumhof, René Lalonde, D. Laxton, J. Lindé, A. Mourougane, Dirk Muir and 7 more. Social Science Research Network, 2010

656 citations recorded by the source corpus.

The paper assesses, using seven structural models used heavily by policymaking institutions, the effectiveness of temporary fiscal stimulus. Models can, more easily than empirical studies, account for differences between fiscal instruments, for differences between structural characteristics of the economy, and for monetary-fiscal policy interactions. Findings are: (i) There is substantial agreement across models on the sizes of fiscal multipliers. (ii) The sizes of spending and targeted transfers multipliers are large. (iii) Fiscal policy is most effective if it has some persistence and if monetary policy accommodates it. (iv) The perception of permanent fiscal stimulus leads to significantly lower initial multipliers.

Subfields: Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/a39f6983cde6baab2ef2283d48b4ed3ca3a816cd

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Citations in the corpus

Will COVID-19 fiscal recovery packages accelerate or retard progress on climate change? (2020, background): “…that the economic success of fiscal stimulus is strongly affected by two attributes: the speed at which the stimulus delivers real-world impact; and the short-and long-run economic multiplier, or return for every dollar of expenditure (Freedman et al., 2009, Coenen et al., 2012, Ramey, 2019).”
A new comparative approach to macroeconomic modeling and policy analysis (2012, methodology): “The calibrated two-economy version has been used by Coenen et al. (2008) to compare the implications of taxation policies in the United States and the euro area. Finally, Rabanal (2009) presents a recent estimated two-economy DSGE model that makes it possible to study spillover effects between the S”
Ten Years After the Financial Crisis: What Have We Learned from the Renaissance in Fiscal Research? (2019, neutral): “For example, Coenen et al. (2012) find a number of estimates that range between 2 and 3 when the period of monetary accommodation is”
How Big (Small?) are Fiscal Multipliers? (2011, positive): “Coenen et al (2010) show that monetary accommodation is an important determinant of the size of scal multipliers in seven di¤erent structural models used in policymaking institutions.”
The Macroeconomic Consequences of Infrastructure Investment (2020, result): “Coenen, Straub, and Trabandt (2013) conduct an analysis in the ECB model with a richer fiscal sector and the range for their multipliers in the short run and long run are similar to those of Coenen et al. (2012). These are shown in the second row of Panel B.”