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 ; Dirk Muir ; Carlos de Resende ; Jan in ‘t Veld ; René Lalonde ; Davide Furceri ; Annabelle Mourougane ; John Roberts ; Stephen Snudden ; Mathias Trabandt ; G; Susanna Mursula ; Christopher J. Erceg ; Charles Freedman ; Jesper Lindé ; Werner Roeger ; Douglas Laxton