Does neoclassical theory account for the effects of big fiscal shocks?
Subtitle: evidence from World War II
By: Ellen R. McGrattan and Lee E. Ohanian.
Contributors: Ohanian, Lee E.
Series: Federal Reserve Bank of Minneapolis, Research Department staff report ;; 315; Staff report (Federal Reserve Bank of Minneapolis. Research Dept. : Online) ;; 315.
Publisher: Federal Reserve Bank of Minneapolis
Published: 2003
Place of publication: [Minneapolis, Minn.]
Language: eng
Format: Electronic resource
Subjects: World War, 1939-1945 -- Finance -- United States.; Fiscal policy -- United States -- History.; Neoclassical school of economics.
Description: "Some economists argue that the neoclassical growth model cannot account for the macroeconomic effects of big fiscal shocks.  This paper reassesses this view.  We test the theory using data from World War II, which is by far the largest fiscal shock in the history of the United States.  We take observed changes in fiscal policy during the war as inputs into a parameterized, dynamic general equilibrium model and compare the values of all variables in the model to the actual values of these variables in the data.  Our main finding is that the theory quantitatively accounts for macroeconomic activity during this big fiscal shock"--Federal Reserve Bank of Minneapolis web site.
Notes: Also available in print.
Includes bibliographical references.
Title from PDF file as viewed on 11/17/2004.
System requirements: Adobe Acrobat Reader.
Mode of access: World Wide Web.