Persistent Government Spending and Fiscal Multipliers: the Investment-Channel

Dupaigne, Martial and Fève, Patrick (2016) Persistent Government Spending and Fiscal Multipliers: the Investment-Channel. European Economic Review, vol. 89. pp. 425-453.

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Official URL: http://tse-fr.eu/pub/31004

Abstract

This paper inspects the mechanism shaping government spending multipliers in various smallscale DSGE setups with endogenous labor supply and capital accumulation. We analytically characterize the short-run investment multiplier, which in equilibrium can be either positive or negative. The investment multiplier increases with the persistence of the exogenous government spending process. The response of investment to government spending shocks strongly affects short-run multipliers on output and consumption.

Item Type: Article
Language: English
Date: October 2016
Refereed: Yes
Uncontrolled Keywords: Government Spending Multipliers, DSGE models, Capital Accumulation, Labor Supply, Market Imperfections
JEL codes: E32 - Business Fluctuations; Cycles
E62 - Fiscal Policy; Public Expenditures, Investment, and Finance; Taxation
Subjects: B- ECONOMIE ET FINANCE
Divisions: TSE-R (Toulouse)
Site: UT1
Date Deposited: 28 Sep 2016 07:37
Last Modified: 15 Jul 2019 12:31
OAI ID: oai:tse-fr.eu:31004
URI: http://publications.ut-capitole.fr/id/eprint/22393

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