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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.
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Contributor : Florin Bilbiie Connect in order to contact the contributor
Submitted on : Monday, September 12, 2011 - 10:01:33 PM
Last modification on : Friday, April 29, 2022 - 10:12:36 AM

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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, Wiley, 2008, 40 (7), pp.1439-1470. ⟨10.1111/j.1538-4616.2008.00166.x⟩. ⟨hal-00622867⟩



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