What Accounts for the Change in U.S. Fiscal Policy Transmission? - Université Paris 1 Panthéon-Sorbonne Access content directly
Journal Articles Journal of Money, Credit and Banking Year : 2008

What Accounts for the Change in U.S. Fiscal Policy Transmission?

Abstract

Using vector autoregressions on U.S. time series for 1957-79 and 1983-2004, we find government spending shocks to have stronger effects on output, consumption, and wages in the earlier period. We try to account for this observation within a DSGE model featuring price rigidities and limited asset market participation. Specifically, we estimate the structural parameters of the model for both periods by matching impulse responses. Model-based counterfactual experiments suggest that most of the changes in fiscal policy transmission are accounted for by increased asset market participation and the more active monetary policy of the Volcker-Greenspan period.

Dates and versions

hal-00622867 , version 1 (12-09-2011)

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Florin Bilbiie, Gernot Mueller, Andre Meier. What Accounts for the Change in U.S. Fiscal Policy Transmission?. Journal of Money, Credit and Banking, 2008, 40 (7), pp.1439-1470. ⟨10.1111/j.1538-4616.2008.00166.x⟩. ⟨hal-00622867⟩
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