Clearing Up the Fiscal Multiplier Morass: Prior and Posterior Analysis / Eric M. Leeper, Nora Traum, Todd B. Walker.

Format:

Book

Author/Creator:

Leeper, Eric M.

Contributor:

National Bureau of Economic Research.

Traum, Nora.

Walker, Todd B.

Series:

Working Paper Series (National Bureau of Economic Research) no. w21433.

NBER working paper series no. w21433

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2015.

Summary:

We use Bayesian prior and posterior analysis of a monetary DSGE model, extended to include fiscal details and two distinct monetary-fiscal policy regimes, to quantify government spending multipliers in U.S. data. The combination of model specification, observable data, and relatively diffuse priors for some parameters lands posterior estimates in regions of the parameter space that yield fresh perspectives on the transmission mechanisms that underlie government spending multipliers. Posterior mean estimates of short-run output multipliers are comparable across regimes--about 1.4 on impact--but much larger after 10 years under passive money/active fiscal than under active money/passive fiscal--means of 1.9 versus 0.7 in present value.

Notes:

Print version record

July 2015.