Government Spending Multipliers under Zero Lower Bound: Evidence from Japan∗
نویسندگان
چکیده
Using a rich data set on government spending forecasts, we estimate the effects of unexpected government spending both when the nominal interest rate is near zero lower bound (ZLB) and outside of ZLB period in Japan. The output multiplier is 1.5 on impact in the ZLB period while it is 0.7 outside of the ZLB period. We argue that this result is not driven by the amount of slack in the economy. We estimate a positive but mild response of inflation in both periods. We consider a standard New Keynesian model and examine two popular alternatives that can generate the ZLB period: fundamental and confidence shocks. A calibrated model with a fundamental-driven ZLB period can match our empirical findings. A model with a confidencedriven ZLB period can match our finding if government spending stays elevated for a long time even after the ZLB period. JEL classification: E32, E62, E5.
منابع مشابه
Government Spending Multipliers under the Zero Lower Bound: Evidence from Japan
Using a rich data set on government spending forecasts, we estimate the effects of unexpected government spending both when the nominal interest rate is near zero lower bound (ZLB) and outside of the ZLB period in Japan. The output multiplier is 1.5 on impact in the ZLB period, while it is 0.7 outside of the ZLB period. We estimate that the government spending shocks increase both private consu...
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