The Fiscal Stimulus Debate "Bone-Headed" and "Neanderthal"?

Policy Letter No. 3, 2009

Authors:
Volker Wieland
Research Area:
Macro Finance
Date:
Mar 2009
Keywords:
fiscal policy, new Keynesian macroeconomic models
Abstract:

US economic advisers called for aggressive fiscal stimulus, and some support further measures. But many macroeconomists are not so sure. This column analyses fiscal stimulus using a New Keynesian model that exemplifies contemporary academic thinking on the subject. It says that the spending multiplier is much lower than the Obama administration’s estimates – government spending may quickly crowd out private consumption and investment.

Link to Publication

Back to list