THE EFFECTS OF FISCAL SHOCKS IN A NEW KEYNESIAN MODEL WITH USEFUL GOVERNMENT SPENDING

2014 ◽  
Vol 19 (6) ◽  
pp. 1380-1399 ◽  
Author(s):  
Francesca D'Auria
Keyword(s):  
Government Spending ◽  
Consumer Preferences ◽  
New Keynesian ◽  
Public Expenditures ◽  
New Keynesian Model ◽  
Monetary Policy Rules ◽  
Output Elasticity ◽  
Keynesian Model ◽  
Private And Public ◽  
Fiscal Shocks

This paper develops a medium-scale New Keynesian model where consumer preferences depend on government expenditures and public capital is productivity-enhancing in order to account for recent evidence on the effects of government spending shocks. Under plausible assumptions on the degree of complementarity between private and public expenditures and on the output elasticity of public spending and considering alternative monetary policy rules, the effects of fiscal shocks delivered by the model are in line with the evidence.

scholarly journals Industry Evidence on the Effects of Government Spending

2011 ◽  
Vol 3 (1) ◽  
pp. 36-59 ◽  
Author(s):  
Christopher J Nekarda ◽  
Valerie A Ramey
Keyword(s):  
Government Spending ◽  
Returns To Scale ◽  
Transmission Mechanism ◽  
New Keynesian ◽  
New Keynesian Model ◽  
Neoclassical Model ◽  
Government Purchases ◽  
Keynesian Model ◽  
Constant Returns To Scale ◽  
Shed Light

This paper investigates the effects of government purchases at the industry level in order to shed light on the transmission mechanism for government spending on the aggregate economy. We create a new panel dataset that matches output and labor variables to industry-specific shifts in government demand. An increase in government demand raises output and hours, lowers real product wages and labor productivity, and has no effect on the markup. The estimates also imply approximately constant returns to scale. The findings are more consistent with the effects of government spending in the neoclassical model than the textbook New Keynesian model. (JEL E12, E23, E62, H50)

A NOTE ON SIMPLE MONETARY POLICY RULES WITH LABOR MARKET AND FINANCIAL FRICTIONS

2018 ◽  
Vol 22 (5) ◽  
pp. 1321-1344 ◽  
Author(s):  
Šarūnas Girdėnas
Keyword(s):  
Labor Market ◽  
Bargaining Power ◽  
Financial Frictions ◽  
Production Costs ◽  
New Keynesian ◽  
New Keynesian Model ◽  
Bargaining Process ◽  
Policy Rules ◽  
Monetary Policy Rules ◽  
Keynesian Model

We consider a New-Keynesian model with financial and labor market frictions where firms borrowing is limited by the enforcement constraint. The wage is set in a bargaining process where the firm's shareholder and worker share the production surplus. As debt service is considered to be a part of production costs, firms borrow to reduce the surplus which allows to lower the wage. We study the model's response to financial shock under two Taylor-type interest rate rules: first one responds to inflation and borrowing, second one to inflation and unemployment. We have found that the second rule delivers better policy in terms of the welfare measure. Additionally, we show that the feedback on unemployment in this rule depends on the extent of workers' bargaining power.

scholarly journals Public Debt and Changing Inflation Targets

2016 ◽  
Vol 8 (4) ◽  
pp. 142-176 ◽  
Author(s):  
Michael U. Krause ◽  
Stéphane Moyen
Keyword(s):  
Central Bank ◽  
Public Debt ◽  
Pronounced Effect ◽  
New Keynesian ◽  
Moderate Increase ◽  
New Keynesian Model ◽  
Inflation Target ◽  
Keynesian Model ◽  
Maturity Structure ◽  
Inflation Targets

What are the effects of a higher central bank inflation target on the burden of real public debt? Several recent proposals have suggested that even a moderate increase in the inflation target can have a pronounced effect on real public debt. We consider this question in a New Keynesian model with a maturity structure of public debt and an imperfectly observed inflation target. We find that moderate changes in the inflation target only have significant effects on real public debt if they are essentially permanent. Moreover, the additional benefits of not communicating a change in the inflation target are minor. (JEL E12, E31, E52, H63)

scholarly journals An estimated New-Keynesian model with unemployment as excess supply of labor

2014 ◽  
Vol 40 ◽  
pp. 338-359 ◽  
Author(s):  
Miguel Casares ◽  
Antonio Moreno ◽  
Jesús Vázquez
Keyword(s):  
New Keynesian ◽  
New Keynesian Model ◽  
Excess Supply ◽  
Keynesian Model
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