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Fiscal Stimulus to the Rescue? Short-Run Benefits and Potential Long-Run Costs of Fiscal Deficits, Douglas Laxton, Dirk Muir, Michael Kumhof, Susanna Mursula, Charles Freedman

This paper uses the IMF's Global Integrated Monetary and Fiscal Model to compute shortrun multipliers of fiscal stimulus measures and long-run crowding-out effects of higher debt. Multipliers of two-year stimulus range from 0.2 to 2.2 depending on the fiscal instrument, the extent of monetary accommodation and the presence of a financial accelerator mechanism. A permanent 0.5 percentage point increase in the U.S. deficit to GDP ratio raises the U.S. tax burden and world real interest rates in the long run, thereby reducing U.S. and rest of the world output by 0.3-0.6 and 0.2 percent, respectively
Table Of Contents
Cover Page; Title Page; Copyright Page; Contents; I. Introduction; 1. WEO Revisions to US GDP, Inflation and Interest Rates since April 2007; 2. United States: Net Worth, Liabilities, and Risky Spread; II. Literature Review; III. The Model; A. Overview; B. Households; 1. Overlapping Generations (OLG) Households; 2. Liquidity-Constrained (LIQ) Households and Aggregate Households; C. Firms; 1. General Comments; 2. Entrepreneurs and Banks; D. Governmental Authorities; 1. Budget Constraint; 2. Fiscal Policy; 3. Monetary Policy; E. Calibration
Literary Form
non fiction
Description based upon print version of record
Physical Description
1 online resource (64 p.)
Specific Material Designation
Form Of Item

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