Is Government Spending at the Zero Lower Bound Desirable?

We thank in particular Larry Christiano, Jordi Galí, Mark Gertler, Stephanie Schmitt-Grohe, Harald Uhlig, Michael Woodford, and seminar participants at Banque de France, Bocconi University, Brown University, Central Bank of Turkey, Columbia University, CREST, the European Central Bank, Kiel Institute for the World Economy, Sciences Po, University of Helsinki, University of Surrey, University of York for comments. Edoardo M. Acabbi provided excellent research assistance. Bilbiie gratefully acknowledges without implicating the support of Institut Universitaire de France and of Banque de France via the eponymous Chair at PSE. Monacelli and Perotti gratefully acknowledge financial support from the European Research Council through the grant Finimpmacro (n. 283483). This paper was also produced as part of the project Growth and Sustainability Policies for Europe (GRASP), a collaborative project funded by the European Commission's Seventh Research Framework Programme, contract number 244725. Part of this work was conducted when Bilbiie was visiting New York University-Abu Dhabi and Monacelli was visiting the Department of Economics of Columbia University, whose hospitality is gratefully acknowledged. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.