A carregar...
Publicação
Public debt, iMPCs & fiscal policy transmission
| Nome: | Descrição: | Tamanho: | Formato: | |
|---|---|---|---|---|
| 1.37 MB | Adobe PDF |
Autores
Orientador(es)
Resumo(s)
In this paper, I examine the relationship between public debt and the effectiveness
of fiscal policy, presenting evidence of an inverse relationship between
government debt and fiscal multipliers. To explain the results, I develop and calibrate
a HANK model tailored to the U.S. economy. The model reveals that higher
public debt diminishes fiscal multipliers by making households less constrained;
with greater debt serving as a liquidity self-insurance tool, agents exhibit a weaker
labor response to fiscal shocks. Theoretically, I show that the level of government
debt influences fiscal multipliers through its impact on intertemporal marginal
propensities to consume (iMPCs). The primary factor driving changes in iMPCs
is the heterogeneous response of agents to the fiscal shock across the aggregate
wealth distribution. By holding more liquidity, households can better self-insure
against potential future shocks, thereby affecting the overall effectiveness of fiscal
policy.
Descrição
Palavras-chave
Fiscal multipliers Public debt HANK Government spending iMPCs
Contexto Educativo
Citação
Grancini, Stefano. Public debt, iMPCs & fiscal policy transmission. (September 2024) Nova SBE Working Paper Series No. 664
Editora
Nova School of Business and Economics