New Keynesian versus old Keynesian government spending multipliers: A comment

Arbeitspapier

Cogan et al. (2009, 2010) claim that the stimulus package passed by the United States Congress in February 2009 had a multiplier far below one. However, the stimulus’ multiplier strongly depends on the assumed monetary policy response. Based on official statements from the Fed chairman, the economic outlook, past behavior of the FOMC, optimal policy considerations, and financial market expectations, we find that in February 2009 a period of monetary accommodation of three years would have been a reasonable prediction. This implies that an appropriate real time assessment of the stimulus’ effects would have been more optimistic than Cogan et al.’s.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Diskussionsbeiträge ; No. 2014/6

Classification and Topics

• Classification: Wirtschaft ; Central Banks and Their Policies ; Fiscal Policy ; Prices, Business Fluctuations, and Cycles: Forecasting and Simulation: Models and Applications ; Money and Interest Rates: Forecasting and Simulation: Models and Applications
• Subject: Obama fiscal stimulus ; fiscal multiplier ; interest rate forecasts

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Hughes Hallett, Andrew ; Rannenberg, Ansgar ; Schreiber, Sven
• Event: Veröffentlichung
• (who): Freie Universität Berlin, Fachbereich Wirtschaftswissenschaft
• (where): Berlin
• (when): 2014

Further information

• Handle: http://hdl.handle.net/10419/94219
• Last update: 10.03.2025, 11:46 AM CET