Effects of Fiscal Stimulus in Structural Models

122 Pages Posted: 29 Mar 2010

See all articles by Günter Coenen

Günter Coenen

affiliation not provided to SSRN

Christopher J. Erceg

Board of Governors of the Federal Reserve System

Charles Freedman

Government of Canada - Bank of Canada; National Bureau of Economic Research (NBER)

Davide Furceri

University of Palermo; Organization for Economic Co-Operation and Development (OECD)

Michael Kumhof

CEPR

Rene Lalonde

International Monetary Fund (IMF) - Research Department

Douglas Laxton

International Monetary Fund (IMF) - Research Department

Jesper Lindé

Sveriges Riksbank - Research Division

Annabelle Mourougane

Organization for Economic Co-Operation and Development (OECD) - Economics Department (ECO)

Dirk Muir

Bank of Canada

Susanna Mursula

International Monetary Fund (IMF)

Carlos A. de Resende

Bank of Canada - International Economic Analysis Department

John Roberts

International Monetary Fund (IMF)

Werner Roeger

European Commission, DGECFIN

Stephen Snudden

Queen's University - Department of Economics; International Monetary Fund (IMF)

Mathias Trabandt

Board of Governors of the Federal Reserve System; Sveriges Riksbank

Jan in 't Veld

European Union - Directorate General for Economic and Financial Affairs (DG ECFIN)

Date Written: March 2010

Abstract

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.

Keywords: Budget deficits, Cross country analysis, Economic forecasting, Economic models, Europe, Fiscal policy, Government expenditures, Monetary policy, Public debt, Stabilization measures, Taxes, United States

Suggested Citation

Coenen, Günter and Erceg, Christopher J. and Freedman, Charles and Furceri, Davide and Kumhof, Michael and Lalonde, René and Laxton, Douglas and Linde, Jesper and Mourougane, Annabelle and Muir, Dirk and Mursula, Susanna and de Resende, Carlos A. and Roberts, John and Roeger, Werner and Snudden, Stephen and Trabandt, Mathias and in 't Veld, Jan, Effects of Fiscal Stimulus in Structural Models (March 2010). IMF Working Paper No. 10/73, Available at SSRN: https://ssrn.com/abstract=1578671

Günter Coenen

affiliation not provided to SSRN

No Address Available

Christopher J. Erceg

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States
202-452-2575 (Phone)
202-736-5638 (Fax)

Charles Freedman

Government of Canada - Bank of Canada ( email )

234 Wellington Street
Ontario, Ontario K1A 0G9
Canada
613 782-8045 (Phone)
613 782-7003 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Davide Furceri

University of Palermo ( email )

Viale delle Scienza
Palermo, 90128
Italy

Organization for Economic Co-Operation and Development (OECD) ( email )

2 rue Andre Pascal
Paris Cedex 16, 75775
France

Michael Kumhof (Contact Author)

CEPR ( email )

London
United Kingdom

René Lalonde

International Monetary Fund (IMF) - Research Department ( email )

700 19th Street NW
Washington, DC 20431
United States

Douglas Laxton

International Monetary Fund (IMF) - Research Department ( email )

700 19th Street NW
Washington, DC 20431
United States

Jesper Linde

Sveriges Riksbank - Research Division ( email )

S-103 37 Stockholm
Sweden
+46 8 787 0873 (Phone)

HOME PAGE: http://www.riksbank.com

Annabelle Mourougane

Organization for Economic Co-Operation and Development (OECD) - Economics Department (ECO) ( email )

2 rue Andre Pascal
Paris Cedex 16, MO 63108
France

Dirk Muir

Bank of Canada ( email )

234 Wellington Street
Ontario, Ontario K1A 0G9
Canada

Susanna Mursula

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Carlos A. De Resende

Bank of Canada - International Economic Analysis Department ( email )

234 Wellington Street
Ontario, Ottawa K1A 0G9
Canada

John Roberts

International Monetary Fund (IMF)

700 19th Street, N.W.
Washington, DC 20431
United States

Werner Roeger

European Commission, DGECFIN ( email )

Economic and Financial Affairs
BU1-3/159, 200 Rue de la Loi
B-1049 Brussels
Belgium

Stephen Snudden

Queen's University - Department of Economics ( email )

99 University Avenue
Kingston K7L 3N6, Ontario
Canada

HOME PAGE: http://www.econ.queensu.ca/snudden/home

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Mathias Trabandt

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

Sveriges Riksbank ( email )

Brunkebergstorg 11
SE-103 37 Stockholm
Sweden

Jan In 't Veld

European Union - Directorate General for Economic and Financial Affairs (DG ECFIN) ( email )

CHAR 14/245
Brussels, Bruxelles B-1049
Belgium
(32 2) 2993 577 (Phone)
(32 2) 2957 499 (Fax)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
355
Abstract Views
1,591
rank
102,869
PlumX Metrics