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Excess Savings and Twin Deficits: The Transmission of Fiscal Stimulus in Open Economies / Rishabh Aggarwal, Adrien Auclert, Matthew Rognlie, Ludwig Straub.
- Format:
- Book
- Author/Creator:
- Aggarwal, Rishabh.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w30185.
- NBER working paper series no. w30185
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2022.
- Summary:
- We study the effects of debt-financed fiscal transfers in a general equilibrium, heterogeneous-agent model of the world economy. In the long run, increases in government debt anywhere raise the world interest rate and increase private wealth everywhere. In the short run, a country with a larger-than-average fiscal deficit experiences both a large increase in private savings ("excess savings") and a small but persistent current account deficit (a slow-motion "twin deficit"). These patterns are consistent with the evolution of the world's balance of payments since the beginning of the Covid pandemic.
- Notes:
- Print version record
- June 2022.
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