New Keynesian Liquidity Trap and Conventional Fiscal Stance: An Estimated DSGE Model-Reference-Cited by-同舟云学术

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

Published:2019-01-01 Issue:1 Volume:33 Page:152-169
ISSN:2256-0394
Container-title:Economics and Business
language:en
Short-container-title:

Author:

Shobande Olatunji Abdul¹,Shodipe Oladimeji Tomiwa²

Affiliation:

1. University of Aberdeen , Aberdeen , Scotland, UK

2. Eastern Illinois University , Illinois, USA

Abstract

Abstract The study investigates the effect of New Keynesian liquidity trap on fiscal stance in the United States, United Kingdom and Japan economies. We developed our DSGE model in the context of an optimal and persistent interactive fiscal policy, which allows us to track the transmission channel through which shocks are distributed among real economic variables. The evidence suggests that zero lower bound mitigates the ability of monetary policy to absorb the effect of exogenous shock on the macroeconomic variables while expansionary fiscal policy was able to absorb the shock persistence transmitted from the nominal interest rate.

Publisher

Walter de Gruyter GmbH

Link

https://www.sciendo.com/pdf/10.2478/eb-2019-0011

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