Fiscal stimulus and distortionary taxation


Drautzburg, Thorsten ; Uhlig, Harald


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URL: http://ub-madoc.bib.uni-mannheim.de/3188
URN: urn:nbn:de:bsz:180-madoc-31881
Document Type: Working paper
Year of publication: 2011
Publication language: English
Institution: Sonstige Einrichtungen > ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung
MADOC publication series: Veröffentlichungen des ZEW (Leibniz-Zentrum für Europäische Wirtschaftsforschung) > ZEW Discussion Papers
Subject: 330 Economics
Classification: JEL: E62 E63 E65 H20 H62 ,
Subject headings (SWD): USA , Konjunkturpolitik , Finanzpolitik , Multiplikator , Steuerprogression , Zinspolitik , Auslandsschulden , Schätzung
Keywords (English): Fiscal Stimulus , New Keynesian model , liquidity trap , zero lower bound , fiscal multiplier
Abstract: We quantify the fiscal multipliers in response to the American Recovery and Reinvestment Act (ARRA) of 2009. We extend the benchmark Smets-Wouters (Smets and Wouters, 2007) New Keynesian model, allowing for credit-constrained households, the zero lower bound, government capital and distortionary taxation. The posterior yields modestly positive short-run multipliers around 0.52 and modestly negative long-run multipliers around -0.42. The multiplier is sensitive to the fraction of transfers given to credit-constrained households, the duration of the zero lower bound and the capital. The stimulus results in negative welfare effects for unconstrained agents. The constrained agents gain, if they discount the future substantially.
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Das Dokument wird vom Publikationsserver der Universitätsbibliothek Mannheim bereitgestellt.




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Drautzburg, Thorsten ; Uhlig, Harald (2011) Fiscal stimulus and distortionary taxation. Open Access [Working paper]
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