Bilbiie, Florin O.
[Verfasser:in]
;
Perotti, Roberto
[Sonstige Person, Familie und Körperschaft];
Monacelli, Tommaso
[Sonstige Person, Familie und Körperschaft]National Bureau of Economic Research
Is Government Spending at the Zero Lower Bound Desirable?
Erschienen:
Cambridge, Mass: National Bureau of Economic Research, November 2014
Erschienen in:NBER working paper series ; no. w20687
Umfang:
1 Online-Ressource
Sprache:
Englisch
DOI:
10.3386/w20687
Identifikator:
Reproduktionsnotiz:
Hardcopy version available to institutional subscribers
Entstehung:
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Beschreibung:
Government spending at the zero lower bound (ZLB) is not necessarily welfare enhancing, even when its output multiplier is large. We illustrate this point in the context of a standard New Keynesian model. In that model, when government spending provides direct utility to the household, its optimal level is at most 0.5-1 percent of GDP for recessions of -4 percent; the numbers are higher for deeper recessions. When spending does not provide direct utility, it is generically welfare-detrimental: it should be kept unchanged at a long run-optimal value