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)

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 INCREASING RETURNS AND THE DESIGN OF INTEREST RATE RULES

2007 ◽  
Vol 12 (1) ◽  
pp. 22-49 ◽  
Author(s):  
WEI XIAO
Keyword(s):  
Interest Rate ◽  
Empirical Research ◽  
Rational Expectations ◽  
Returns To Scale ◽  
Increasing Returns ◽  
New Keynesian ◽  
New Keynesian Model ◽  
Interest Rate Rules ◽  
Increasing Returns To Scale ◽  
Keynesian Model

We introduce increasing returns to scale into an otherwise standard New Keynesian model with capital, and study the determinacy and E-stability of equilibrium under Taylor-type interest rate rules. With very mild increasing returns supported by empirical research, the conventional wisdom regarding the design of interest rate rules can be overturned. In particular, the “Taylor principle” no longer guarantees either determinacy or E-stability of the rational expectations equilibrium.

WHAT WE DON'T KNOW ABOUT THE MONETARY TRANSMISSION MECHANISM AND WHY WE DON'T KNOW IT

2008 ◽  
Vol 12 (S1) ◽  
pp. 60-74 ◽  
Author(s):  
ANDREAS BEYER ◽  
ROGER E.A. FARMER
Keyword(s):  
Rational Expectations ◽  
Transmission Mechanism ◽  
New Keynesian ◽  
Monetary Transmission ◽  
Reduced Form ◽  
New Keynesian Model ◽  
Policy Rule ◽  
Policy Regime ◽  
Equivalent Models ◽  
Keynesian Model

We study identification in a class of linear rational expectations models. For any given exactly identified model, we provide an algorithm that generates a class of equivalent models that have the same reduced form. We use our algorithm to show that a model proposed by Jess Benhabib and Roger Farmer is observationally equivalent to the standard new-Keynesian model when observed over a single policy regime. However, the two models havedifferentimplications for the design of an optimal policy rule.

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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