- Exercise 1 (p. 273)
- An Introduction to Aggregate Supply
From the blogosphere
- Which kind of countercyclical fiscal policy is best?
- "a very interesting paper"
- "The figure shows considerable variation over time, establishing that the state of the economy is crucial for the effectiveness of fiscal policy response.32 Multipliers rise considerably during the financial crisis, and tend to be low during other periods. Interestingly, the purchases multipliers is the most stable, and smaller than one. It only rises modestly around the Lehman event, and falls sharply during 2009 (precisely when the ARRA is implemented). The transfer multiplier is typically lower than the purchases multiplier, and is even negative during some periods of expansion. It rises considerably, above 1.5, during the financial crisis, which is consistent with the large role of transfers for stabilization. Bank recapitalizations also have fiscal multipliers that are typically negative but rise considerably during the crisis, going over 2. These facts provide further evidence on the stabilizing role of these two fiscal policy tools during the financial crisis. Interestingly, and unlike government purchases, these effects are extremely state dependent as these two tools have the potential to generate negative multipliers if used during periods of expansion." (p. 47-48)
- Confusions about the multiplier < 1 (me defending
- Mobilizing Real Resources