Simple Analytics of the Government Expenditure Multiplier

American Economic Journal: Macroeconomics - Tập 3 Số 1 - Trang 1-35 - 2011
Michael Woodford1
1Department of Economics, Columbia University, 420 West 118th Street, New York, NY 10027.

Tóm tắt

This paper explains the key factors that determine the output multiplier of government purchases in New Keynesian models, through a series of simple examples that can be solved analytically. Sticky prices or wages allow for larger multipliers than in a neoclassical model, though the size of the multiplier depends crucially on the monetary policy response. A multiplier well in excess of one is possible when monetary policy is constrained by the zero lower bound, and in this case welfare increases if government purchases expand to partially fill the output gap that arises from the inability to lower interest rates. (JEL E12, E23, E32, E62, H20, H50)

Từ khóa


Tài liệu tham khảo

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Thông tin xuất bản

American Economic Journal: Macroeconomics

Tập 3 Số 1

1-35

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