Fiscal stimulus in a monetary union
Subtitle: evidence from u.s. regions
By: Emi Nakamura, Jón Steinsson
Contributors: National Bureau of Economic Research
Series: NBER working paper series -- working paper 17391; Working paper series (National Bureau of Economic Research : Online) -- working paper no. 17391.
Publisher: National Bureau of Economic Research
Published: 2011
Place of publication: Cambridge, MA
Language: eng
Format: Electronic resource
Description: "We use rich historical data on military procurement spending across U.S.  regions to estimate the effects of government spending in a monetary union.  Aggregate military build-ups and draw-downs have differential effects across regions.  We use this variation to estimate an "open economy relative multiplier'' of approximately 1.5.  We develop a framework for interpreting this estimate and relating it to estimates of the standard closed economy aggregate multiplier.  The closed economy aggregate multiplier is highly sensitive to how strongly aggregate monetary and tax policy "leans against the wind.'' In contrast, our estimate "differences out'' these effects because different regions in the union share a common monetary and tax policy.  Our estimate provides evidence in favor of models in which demand shocks can have large effects on output"--National Bureau of Economic Research web site.
Notes: Title from PDF file as viewed on 11/29/2011.

Includes bibliographical references.

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