Details

Autor(en) / Beteiligte

• Mitra, Kaushik
• Evans, George W.
• Honkapohja, Seppo

Titel

FISCAL POLICY MULTIPLIERS IN AN RBC MODEL WITH LEARNING

Ist Teil von

• Macroeconomic dynamics, 2019-01, Vol.23 (1), p.240-283

Ort / Verlag

New York, USA: Cambridge University Press

Erscheinungsjahr

2019

Quelle

Alma/SFX Local Collection

Beschreibungen/Notizen

• Using the standard real business cycle model with lump-sum taxes, we analyze the impact of fiscal policy when agents form expectations using adaptive learning rather than rational expectations (RE). The output multipliers for government purchases are significantly higher under learning, and fall within empirical bounds reported in the literature, which is in sharp contrast to the implausibly low values under RE. Positive effects of fiscal policy are demonstrated during times of economic stress like the recent Great Recession. Finally, it is shown how learning can lead to consumption and investment dynamics empirically documented during some episodes of “fiscal consolidations.”