Fiscal stimulus and distortionary taxation
By: Thorsten Drautzburg, Harald Uhlig
Contributors: Uhlig, Harald, 1922-; National Bureau of Economic Research
Series: NBER working paper series -- working paper 17111; Working paper series (National Bureau of Economic Research : Online) -- working paper no. 17111.
Publisher: National Bureau of Economic Research
Published: 2011
Place of publication: Cambridge, MA
Language: eng
Format: Electronic resource
Description: "We quantify the fiscal multipliers in response to the American Recovery and Reinvestment Act (ARRA) of 2009.  We extend the benchmark Smets-Wouters (2007) New Keynesian model, allowing for credit-constrained households, the zero lower bound, government capital and distortionary taxation.  The posterior yields modestly positive short-run multipliers around 0.52 and modestly negative long-run multipliers around -0.42.  The multiplier is sensitive to the fraction of transfers given to credit-constrained households, the duration of the zero lower bound and the capital.  The stimulus results in negative welfare effects for unconstrained agents.  The constrained agents gain, if they discount the future substantially"--National Bureau of Economic Research web site.
Notes: Title from PDF file as viewed on 8/30/2011.

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