Have a personal or library account? Click to login

New Keynesian Liquidity Trap and Conventional Fiscal Stance: An Estimated DSGE Model

Economics and Business
Volume 33 (2019): Issue 1 (January 2019)
By:
Open Access
|Sep 2019

References

  1. Abel, A. B. (1975). A Comparison of three Control Algorithms Applied to Monetarist-Fiscal Debate. Annal of Economic and Social Measurement, 1(3), 259–290.
    Search in Google ScholarBack to article
  2. Adam, K. (2011). Government Debt and Optimal Monetary and Fiscal Policy. European Economic Review, 55(1), 57–74. https://doi.org/10.1016/j.euroecorev.2010.11.00310.1016/j.euroecorev.2010.11.003
    Open DOISearch in Google ScholarBack to article
  3. Afonso, A., & Jalles, J. T. (2017). Fiscal Episodes and Market Power. Open Economies Review, 28(2), 233–250. https://doi.org/10.1007/s11079-016-9419-710.1007/s11079-016-9419-7
    Open DOISearch in Google ScholarBack to article
  4. Ashihara, A., & Kameda, K. (2018). Is Fiscal Expansion More Effective in a Financial Crisis? Applied Economics Letters, 25(2), 111–114. https://doi.org/10.1080/13504851.2017.129909810.1080/13504851.2017.1299098
    Open DOISearch in Google ScholarBack to article
  5. Azariadis, C. (2018). Riddles and Models: A Review Essay on Michel De Vroey’s A History of Macroeconomics from Keynes to Lucas and Beyond. Journal of Economic Literature, 56(4), 1538–1576. https://doi.org/10.1257/jel.2018143910.1257/jel.20181439
    Open DOISearch in Google ScholarBack to article
  6. Barro, R. J. (1980). A Capital Market in an Equilibrium Business Cycle Model. Econometrica, 48(6), 1393. https://doi.org/10.2307/191281410.2307/1912814
    Open DOISearch in Google ScholarBack to article
  7. Barro, R. J. (1981). Output Effects of Government Purchases. Journal of Political Economy, 89(6), 1086–1120. https://doi.org/10.1086/26102410.1086/261024
    Open DOISearch in Google ScholarBack to article
  8. Barro, R. J., & Gordon, D. B. (1983). Rules, Discretion and Reputation in a Model of Moneatry Policy. NBER Working Paper 1079. https://doi.org/10.3386/w107910.3386/w1079
    Open DOISearch in Google ScholarBack to article
  9. Baxter, B. M., & King, R. G. (1993). Fiscal Policy in General Equilibrium. The American Economic Review, 83(3), 315–334.
    Search in Google ScholarBack to article
  10. Benchimol, J. (2015). Money in the Production Function: A New Keynesian DSGE Perspective. Southern Economic Journal, 82(1), 152–184. https://doi.org/10.2139/ssrn.232813510.2139/ssrn.2328135
    Open DOISearch in Google ScholarBack to article
  11. Bhattarai, K., & Trzeciakiewicz, D. (2017). Macroeconomic Impacts of Fiscal Policy Shocks in the UK: A DSGE analysis. Economic Modelling, 61, 321–338. https://doi.org/10.1016/j.econmod.2016.10.01210.1016/j.econmod.2016.10.012
    Open DOISearch in Google ScholarBack to article
  12. Blanchard, O. (2018). On the Future of Macroeconomic Models. Oxford Review of Economic Policy, 34(1–2), 43–54. https://doi.org/10.1093/oxrep/grx04510.1093/oxrep/grx045
    Open DOISearch in Google ScholarBack to article
  13. Blanchard, O. J., Erceg, C. J., & Lindé, J. (2015). Jump-Starting the Euro Area Recovery: Would a Rise in Core Fiscal Spending Help the Periphery? Riksbank Research Paper Series No. 128. https://doi.org/10.2139/ssrn.263538210.2139/ssrn.2635382
    Open DOISearch in Google ScholarBack to article
  14. Boldrin, B. M., Christiano, L. J., & Fisher, J. D. M. (2001). Habit Persistence, Asset Returns, and the Business Cycle. The American Economic Review, 91(1), 149–166. https://doi.org/10.1257/aer.91.1.14910.1257/aer.91.1.149
    Open DOISearch in Google ScholarBack to article
  15. Boubaker, S., Nguyen, D. K., & Paltalidis, N. (2018). Fiscal Policy Interventions at the Zero Lower Bound. Journal of Economic Dynamics and Control, 93, 297–314. https://doi.org/10.1016/j.jedc.2018.01.04810.1016/j.jedc.2018.01.048
    Open DOISearch in Google ScholarBack to article
  16. Buera, F., & Nicolini, J. P. (2014). Liquidity Traps and Monetary Policy: Managing a Credit Crunch. FRB of Chicago Working Paper No. 2014-14. https://doi.org/10.2139/ssrn.253745210.2139/ssrn.2537452
    Open DOISearch in Google ScholarBack to article
  17. Calvo, G. A. (1983). Staggered Prices in a Utility-Maximizing Framework. Journal of Monetary Economics, 12(3), 383–398. https://doi.org/10.1016/0304-3932(83)90060-010.1016/0304-3932(83)90060-0
    Open DOISearch in Google ScholarBack to article
  18. Cars, H., & Lustenhouwer, J. (2017). Managing Unanchored, Heterogeneous Expectations and Liquidity Traps. BERG Working Paper Series, No. 131, Bamberg University, Bamberg Economic Research Group (BERG), Bamberg, 1–44.
    Search in Google ScholarBack to article
  19. Catalano, M., & Pezzolla, E. (2017). The Italian Labor Market Reform : An Evaluation of the Jobs Act Using the Prometeia DSGE Model. Italian Economic Journal, 3(2), 209–238. https://doi.org/10.1007/s40797-017-0057-z10.1007/s40797-017-0057-z
    Open DOISearch in Google ScholarBack to article
  20. Christiano, L., Eichenbaum, M., & Rebelo, S., (2011). When Is the Government Spending Multiplier Large ? Journal of Political Economy, 119(1), 78–121. https://doi.org/10.1086/65931210.1086/659312
    Open DOISearch in Google ScholarBack to article
  21. Christiano, L. J., Eichenbaum, M. S., & Trabandt, M. (2016). Unemployment and Business Cycles. Econometrica, 84(4), 1523–1569. https://doi.org/10.3982/ECTA1177610.3982/ECTA11776
    Open DOISearch in Google ScholarBack to article
  22. Christiano, L. J., Eichenbaum, M. S., & Trabandt, M. (2018). On DSGE Models. Journal of Economic Perspectives, 32(3), 113–140. https://doi.org/10.1257/jep.32.3.11310.1257/jep.32.3.113
    Open DOISearch in Google ScholarBack to article
  23. Christiano, L. J., Trabandt, M., & Walentin, K. (2011). DSGE Models for Monetary Policy Analysis. Handbook of Monetary Economics, 3, 285–367. https://doi.org/10.1016/B978-0-444-53238-1.00007-710.1016/B978-0-444-53238-1.00007-7
    Open DOISearch in Google ScholarBack to article
  24. Clarida, R., Gali, J., & Gertler, M. (1998). Monetary Policy Rules and Macroeconomic Stability: Evidence and Some Theory. National Bureau of Economic Research Working Paper 6442. https://doi.org/10.3386/w644210.3386/w6442
    Open DOISearch in Google ScholarBack to article
  25. Cochrane, J. H. (2005). Money as Stock. Journal of Monetary Economics, 52(3), 501–528. https://doi.org/10.1016/j.jmoneco.2004.07.00410.1016/j.jmoneco.2004.07.004
    Open DOISearch in Google ScholarBack to article
  26. Cochrane, J. H. (2011). Determinacy and Identification with Taylor Rules. Journal of Political Economy, 119(3), 565–610. https://doi.org/10.1086/66081710.1086/660817
    Open DOISearch in Google ScholarBack to article
  27. Cochrane, J. H. (2014). Monetary Policy with Interest on Reserves. Journal of Economic Dynamics and Control, 49, 74–108. https://doi.org/10.1016/j.jedc.2014.09.00310.1016/j.jedc.2014.09.003
    Open DOISearch in Google ScholarBack to article
  28. Cochrane, J. H. (2017). The New-Keynesian Liquidity Trap. Journal of Monetary Economics, 92, 47–63. https://doi.org/10.1016/j.jmoneco.2017.09.00310.1016/j.jmoneco.2017.09.003
    Open DOISearch in Google ScholarBack to article
  29. Cochrane, J. H. (2018). Stepping on a Rake : The Fiscal Theory of Monetary Policy. European Economic Review, 101, 354–375. https://doi.org/10.1016/j.euroecorev.2017.10.01110.1016/j.euroecorev.2017.10.011
    Open DOISearch in Google ScholarBack to article
  30. Diniz, A. (2018). Effects of Fiscal Consolidations in Latin America. IMF Economic Review, 66(4), 694–731. https://doi.org/10.1057/s41308-018-0069-110.1057/s41308-018-0069-1
    Open DOISearch in Google ScholarBack to article
  31. Drautzburg, T., & Uhlig, H. (2015). Fiscal Stimulus and Distortionary Taxation. Review of Economic Dynamics, 18(4), 894–920. https://doi.org/10.1016/j.red.2015.09.00310.1016/j.red.2015.09.003
    Open DOISearch in Google ScholarBack to article
  32. Falagiarda, M., & Saia, A. (2017). Credit, Endogenous Collateral and Risky Assets: A DSGE Model. International Review of Economics and Finance, 49, 125–148. https://doi.org/10.1016/j.iref.2017.01.02510.1016/j.iref.2017.01.025
    Open DOISearch in Google ScholarBack to article
  33. Farmer, R. E. A., Khramov, V., & Nicolò, G. (2015). Solving and estimating Indeterminate DSGE Models. Journal of Economic Dynamics and Control, 54, 17–36. https://doi.org/10.1016/j.jedc.2015.02.01210.1016/j.jedc.2015.02.012
    Open DOISearch in Google ScholarBack to article
  34. Förster, B., & Hayo, B. (2018). Monetary and Fiscal Policy in Times of Crisis: A New Keynesian Perspective in Continuous Time. Manchester School, 86(1), 21–48. https://doi.org/10.1111/manc.1217310.1111/manc.12173
    Open DOISearch in Google ScholarBack to article
  35. Gelain, P., Iskrev, N., Lansing, K. J., & Mendicino, C. (2019). Inflation Dynamics and Adaptive Expectations in an Estimated DSGE Model. Journal of Macroeconomics, 59, 258–277. https://doi.org/10.1016/j.jmacro.2018.12.00210.1016/j.jmacro.2018.12.002
    Open DOISearch in Google ScholarBack to article
  36. Gerke, R., Jonsson, M., Kliem, M., Kolasa, M., Lafourcade, P., Locarno, A., Makarski, K., McAdam, P. (2013). Assessing Macro-Financial Linkages: A Model Comparison Exercise. Economic Modelling, 31, 253–264. https://doi.org/10.1016/j.econmod.2012.10.01910.1016/j.econmod.2012.10.019
    Open DOISearch in Google ScholarBack to article
  37. Buss, G. (2015). Financial Frictions in a DSGE Model for Latvia. Dynare Working Papers Series, Working paper No. 42.
    Search in Google ScholarBack to article
  38. Gobbi, A., & Grazzini, J. (2019). A Basic New Keynesian DSGE Model With Dispersed Information: An Agent-Based Approach. Journal of Economic Behavior and Organization, 157, 101–116. https://doi.org/10.1016/j.jebo.2017.12.01510.1016/j.jebo.2017.12.015
    Open DOISearch in Google ScholarBack to article
  39. Hur, J., & Rhee, W. (2019). Multipliers of Expected vs Unexpected Fiscal Shocks: The Case of Korea. Economic Modelling, (3 June 2019). https://doi.org/10.1016/j.econmod.2019.05.02110.1016/j.econmod.2019.05.021
    Open DOISearch in Google ScholarBack to article
  40. Iwata, Y. (2009). Fiscal Policy in an Estimated DSGE Model of the Japanese Economy: Do Non-Ricardian Households Explain All? Social ESRI Discussion PaperResearch, (216), 2–33. Retrieved from http://www.esri.go.jp/jp/archive/e_dis/e_dis220/e_dis216a.pdf
    Search in Google ScholarBack to article
  41. Iwata, Y. (2013). Two fiscal Policy Puzzles Revisited : New Evidence and an Explanation. Journal of International Money and Finance, 33, 188–207. https://doi.org/10.1016/j.jimonfin.2012.11.01510.1016/j.jimonfin.2012.11.015
    Open DOISearch in Google ScholarBack to article
  42. Jiang, W. (2019). Optimal Taxation Under Equilibrium Unemployment and Economic Profits. The B.E. Journal of Macroeconomics, 19(1), 1–21. https://doi.org/10.1515/bejm-2017-022610.1515/bejm-2017-0226
    Open DOISearch in Google ScholarBack to article
  43. Jump, R. C., & Levine, P. (2019). Behavioural New Keynesian Models. Journal of Macroeconomics, 59, 59–77. https://doi.org/10.1016/j.jmacro.2018.11.00210.1016/j.jmacro.2018.11.002
    Open DOISearch in Google ScholarBack to article
  44. Kataryniuk, I., & Vallés, J. (2018). Fiscal Consolidation after the Great Recession: The Role of Composition. Oxford Economic Papers, 70(2), 563–585. https://doi.org/10.1093/oep/gpx03210.1093/oep/gpx032
    Open DOISearch in Google ScholarBack to article
  45. Lorenzoni, G., & Werning, I. (2013). Slow Moving Debt Crises. NBER Working Paper No. 19228, 1–32. https://doi.org/10.3386/w1922810.3386/w19228
    Open DOISearch in Google ScholarBack to article
  46. Mankiw, N. G., & Reis, R. (2018). Friedman’s Presidential Address in the Evolution of Macroeconomic Thought. Journal of Economic Perspectives, 32(1), 81–96. https://doi.org/10.1257/jep.32.1.8110.1257/jep.32.1.81
    Open DOISearch in Google ScholarBack to article
  47. Miyamoto, W., Nguyen, T. L., & Sergeyev, D. (2016). Government Spending Multipliers Under the Zero Lower Bound : Evidence from Japan (October 29, 2016). Available: https://doi.org/10.2139/ssrn.286551010.2139/ssrn.2865510
    Open DOISearch in Google ScholarBack to article
  48. Nakamichi, T. (2012). Decisive Monetary Easing Policy to Beat Deflation. Bank of Japan; NAICS: 521110, Don Jones Institutional News, 22, Oct 2012.
    Search in Google ScholarBack to article
  49. Nasir, M. A., Yago, M., Soliman, A. M., & Wu, J. (2016). Financial stability, wealth effects and Optimal Macroeconomic Policy Combination in the United Kingdom: A New-Keynesian Dynamic Stochastic General Equilibrium Framework. Cogent Economics & Finance, 4, 1–25. https://doi.org/10.1080/23322039.2015.113609810.1080/23322039.2015.1136098
    Open DOISearch in Google ScholarBack to article
  50. Patrick, F., Moura, A., & Pierrard, O. (2019). Shadow Banking and Financial Regulation : A Small-Scale DSGE Perspective. Journal of Economic Dynamics and Control, 101, 130–144. https://doi.org/10.1016/j.jedc.2019.02.00110.1016/j.jedc.2019.02.001
    Open DOISearch in Google ScholarBack to article
  51. Praščević, A., & Ješić, M. (2019). Modeling Macroeconomic Policymakers’ Interactions under Zero Lower Bound Environment: The New Keynesian Theoretical Approach. Journal of Central Banking Theory and Practice, 8(1), 5–38. https://doi.org/10.2478/jcbtp-2019-000110.2478/jcbtp-2019-0001
    Open DOISearch in Google ScholarBack to article
  52. Prota, F., & Grisorio, M. J. (2018). Public Expenditure in time of Crisis: are Italian Policymakers Choosing the Right Mix? Economia Politica, 35(2), 337–365. https://doi.org/10.1007/s40888-018-0124-410.1007/s40888-018-0124-4
    Open DOISearch in Google ScholarBack to article
  53. Ramey, V. A. (2011). Can Government Purchases Stimulate the Economy ? Journal of Economic Literature, 49(3), 673–685. https://doi.org/10.1257/jel.49.3.67310.1257/jel.49.3.673
    Open DOISearch in Google ScholarBack to article
  54. Ramey, V. A., & Zubairy, S. (2018). Government Spending Multipliers in Good Times and in Bad : Evidence from US Historical Data. Journal of Political Economy, 126(2), 850–897. https://doi.org/10.1086/69627710.1086/696277
    Open DOISearch in Google ScholarBack to article
  55. Reis, R. (2018). Is something really wrong with macroeconomics? Oxford Review of Economic Policy, 34(1-2), 132–155. https://doi.org/10.1093/oxrep/grx05310.1093/oxrep/grx053
    Open DOISearch in Google ScholarBack to article
  56. Roch, F., & Uhlig, H. (2018). The Dynamics of Sovereign Debt Crises and Bailouts. Journal of International Economics, 114, 1–13. https://doi.org/10.1016/j.jinteco.2018.05.00210.1016/j.jinteco.2018.05.002
    Open DOISearch in Google ScholarBack to article
  57. Schabert, A., & Bredemeier, C. (2015). Fiscal Policy, Interest Rate Spreads, and the Zero Lower Bound. Department of Economics University of Cologne Albertus-Magnus-Platz, D-50923 Köln, Germany, Working Paper Series, No. 80.10.2139/ssrn.2598933
    Search in Google ScholarBack to article
  58. Shobande, O. (2019). Monetary Policy Spillover through Industrial Growth in Nigeria: A Time Series Analysis. Economics and Business, 33(1), 94–110. https://doi.org/10.2478/eb-2019-000710.2478/eb-2019-0007
    Open DOISearch in Google ScholarBack to article
  59. Shobande, O. A. (2018). Modelling the Dynamics of Government Finance on Bond Market Return in Nigeria. Theoretical Economics Letters, 8, 3438–3443. https://doi.org/10.4236/tel.2018.81521010.4236/tel.2018.815210
    Search in Google ScholarBack to article
  60. Uhlig, H. (2005). What are the Effects of Monetary Policy on Output? Results from an Agnostic Identification Procedure. Journal of Monetary Economics, 52(2), 381–419. https://doi.org/10.1016/j.jmoneco.2004.05.00710.1016/j.jmoneco.2004.05.007
    Open DOISearch in Google ScholarBack to article
  61. Vines, D., & Wills, S. (2018). The Rebuilding Macroeconomic Theory Project: An Analytical Assessment. Oxford Review of Economic Policy, 34(1-2), 1–42. https://doi.org/10.1093/oxrep/grx06210.1093/oxrep/grx062
    Open DOISearch in Google ScholarBack to article
  62. Werning, I. (2015). Managing a Liquidity Trap. NBER Working Paper Series, 67(6), 14–21.
    Search in Google ScholarBack to article
  63. Woodford, M. (2007). Forecast Targeting as a Monetary Policy Strategy: Policy Rules in Practice. NBER Working paper 13716.https://doi.org/10.3386/w1371610.3386/w13716
    Open DOISearch in Google ScholarBack to article
DOI: https://doi.org/10.2478/eb-2019-0011 | Journal eISSN: 2256-0394
Journal RSS Feed
Language: English
Page range: 152 - 169
Published on: Sep 30, 2019
Published by: Riga Technical University
In partnership with: Paradigm Publishing Services
Publication frequency: 1 times per year
Keywords:
Fiscal Policy,
Liquidity Trap,
Bayesian,
DSGE Model
Related subjects:
Business and economics,
Political economics,
Political economics, other,
Business management,
Business management, other,
Mathematics and statistics for economists,
Statistics,
Econometrics

© 2019 Olatunji Abdul Shobande, Oladimeji Tomiwa Shodipe, published by Riga Technical University
This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

Previous articleVolume 33 (2019): Issue 1 (January 2019)Next article