Department of Economics
Nelson Hall Campus Box 8110
North Carolina State University
Raleigh, NC 27695
Information about this author at RePEc
NBER Working Papers and Publications
|July 2015||Clearing Up the Fiscal Multiplier Morass: Prior and Posterior Analysis|
with Eric M. Leeper, Todd B. Walker: w21433
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.
|September 2011||Clearing Up the Fiscal Multiplier Morass|
with Eric M. Leeper, Todd B. Walker: w17444
Bayesian prior predictive analysis of five nested DSGE models suggests that model specifications and prior distributions tightly circumscribe the range of possible government spending multipliers. Multipliers are decomposed into wealth and substitution effects, yielding uniform comparisons across models. By constraining the multiplier to tight ranges, model and prior selections bias results, revealing less about fiscal effects in data than about the lenses through which researchers choose to interpret data. When monetary policy actively targets inflation, output multipliers can exceed one, but investment multipliers are likely to be negative. Passive monetary policy produces consistently strong multipliers for output, consumption, and investment.
|July 2009||Dynamics of Fiscal Financing in the United States|
with Eric M. Leeper, Michael Plante: w15160
Dynamic stochastic general equilibrium models that include policy rules for government spending, lump-sum transfers, and distortionary taxation on labor and capital income and on consumption expenditures are fit to U.S. data under a variety of specifications of fiscal policy rules. We obtain several results. First, the best fitting model allows a rich set of fiscal instruments to respond to stabilize debt. Second, responses of aggregate variables to fiscal policy shocks under rich fiscal rules can vary considerably from responses that allow only non-distortionary fiscal instruments to finance debt. Third, based on estimated policy rules, transfers, capital tax rates, and government spending have historically responded strongly to government debt, while labor taxes have responded more weakl...
Published: Leeper, Eric M. & Plante, Michael & Traum, Nora, 2010.
"Dynamics of fiscal financing in the United States,"
Journal of Econometrics,
Elsevier, vol. 156(2), pages 304-321, June.
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