McManus, Richard, Ozkan, Fatma Gulcin orcid.org/0000-0001-7652-1361 and Trzeciakiewicz, Dawid (2020) Why are fiscal multipliers asymmetric?:The role of credit constraints. Economica. ISSN 1468-0335
Abstract
Recent empirical evidence strongly points to the state-dependence of fiscal multipliers which are larger in recessions than in expansions. Yet, standard business cycle models face great difficulty in producing such asymmetric fiscal policy effects. By incorporating endogenously binding collateral constraints into a medium scale DSGE model, we find that fiscal effectiveness can vary substantially across the business cycle. The key to our framework is the state-dependent nature of collateral constraints; binding in bad times while slack in good times, amplifying the effectiveness of fiscal policy and hence generating fiscal multipliers that are larger during recessions.
Metadata
Item Type: | Article |
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Authors/Creators: |
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Copyright, Publisher and Additional Information: | This is an author-produced version of the published paper. Uploaded in accordance with the publisher’s self-archiving policy. Further copying may not be permitted; contact the publisher for details. |
Dates: |
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Institution: | The University of York |
Academic Units: | The University of York > Faculty of Social Sciences (York) > Economics and Related Studies (York) |
Depositing User: | Pure (York) |
Date Deposited: | 25 Feb 2019 11:00 |
Last Modified: | 16 Oct 2024 15:31 |
Published Version: | https://doi.org/10.1111/ecca.12340 |
Status: | Published online |
Refereed: | Yes |
Identification Number: | 10.1111/ecca.12340 |
Open Archives Initiative ID (OAI ID): | oai:eprints.whiterose.ac.uk:142905 |