New Keynesian versus old Keynesian government spending multipliers

  • Renewed interest in fiscal policy has increased the use of quantitative models to evaluate policy. Because of modeling uncertainty, it is essential that policy evaluations be robust to alternative assumptions. We find that models currently being used in practice to evaluate fiscal policy stimulus proposals are not robust. Government spending multipliers in an alternative empirically-estimated and widely-cited new Keynesian model are much smaller than in these old Keynesian models; the estimated stimulus is extremely small with GDP and employment effects only one-sixth as large.

Download full text files

Export metadata

Additional Services

Share in Twitter Search Google Scholar
Author:John F. Cogan, Tobias J. Cwik, John B. Taylor, Volker WielandORCiDGND
Parent Title (German):Center for Financial Studies (Frankfurt am Main): CFS working paper series ; No. 2009,17
Series (Serial Number):CFS working paper series (2009, 17)
Document Type:Working Paper
Year of Completion:2009
Year of first Publication:2009
Publishing Institution:Universitätsbibliothek Johann Christian Senckenberg
Release Date:2009/09/01
Tag:Fiscal Multiplier; Fiscal Stimulus; Government Spending; Macroeconomic Modeling; New Keynesian Model
GND Keyword:Öffentliche Ausgaben; Fiskalpolitik; Keynessche Theorie
Institutes:Wirtschaftswissenschaften / Wirtschaftswissenschaften
Wissenschaftliche Zentren und koordinierte Programme / Institute for Monetary and Financial Stability (IMFS)
Wissenschaftliche Zentren und koordinierte Programme / Center for Financial Studies (CFS)
CCS-Classification:C. Computer Systems Organization / C.5 COMPUTER SYSTEM IMPLEMENTATION / C.5.2 Minicomputers**
Dewey Decimal Classification:3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft
JEL-Classification:C Mathematical and Quantitative Methods / C5 Econometric Modeling / C52 Model Evaluation and Selection
Licence (German):License LogoDeutsches Urheberrecht