Is Stimulative Fiscal Policy More Effective at the Zero Lower Bound?

Several recent research efforts have found that stimulative fiscal policy-government spending or tax cuts-can have unusual effects when nominal interest rates are as low as they are today. In particular, some studies have found that the government spending "multiplier" can be much larger a...

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Bibliographic Details
Published in:Federal Reserve Bank of Richmond. Economic Brief 2011, Vol.11 (8), p.1
Main Authors: Haltom, Renee, Sarte, Pierre-Daniel G
Format: Report
Language:English
Subjects:
American Recovery & Reinvestment Act 2009-US
Central banks
Consumption
Economic conditions
Economic models
Economic theory
Effectiveness studies
Employment
Fiscal policy
Government spending
Households
Inflation
Interest rates
Labor supply
Monetary policy
Prices
Recessions
Tax cuts
Taxes
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Summary:Several recent research efforts have found that stimulative fiscal policy-government spending or tax cuts-can have unusual effects when nominal interest rates are as low as they are today. In particular, some studies have found that the government spending "multiplier" can be much larger at the zero lower bound. Despite these results, some caution is due when interpreting the size of the fiscal multiplier. [PUBLICATION ABSTRACT]
ISSN:2475-9546
2475-9546