Description

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.

Taxonomy

Economic policy , Fiscal policy , Monetary policy

More publications in this series: Working Papers

More publications by: Michael Kumhof ; Günter Coenen ; Dirk Muir ; Charles Freedman ; Susanna Mursula ; Christopher Erceg ; Davide Furceri ; René Lalonde ; Jesper Lindé ; Annabelle Mourougane ; John Roberts ; Werner Roeger ; Carlos de Resende ; Stephen Snudden ; Mathias Trabandt ; Jan in ‘t Veld ; Douglas Laxton