New Keynesian Liquidity Trap and Conventional Fiscal Stance: An Estimated DSGE Model

2019
Olatunji Abdul Shobande, Oladimeji Tomiwa Shodipe

The study investigates the effect of New Keynesian liquidity trap on fiscal stance in the United States, United Kingdom and Japan economies. We developed our DSGE model in the context of an optimal and persistent interactive fiscal policy, which allows us to track the transmission channel through which shocks are distributed among real economic variables. The evidence suggests that zero lower bound mitigates the ability of monetary policy to absorb the effect of exogenous shock on the macroeconomic variables while expansionary fiscal policy was able to absorb the shock persistence transmitted from the nominal interest rate.

Atslēgas vārdi
Fiscal Policy, Liquidity Trap, Bayesian, DSGE Model
DOI
10.2478/eb-2019-0011

Shobande, O., Shodipe, O. New Keynesian Liquidity Trap and Conventional Fiscal Stance: An Estimated DSGE Model. Economics and Business, 2019, Vol. 33, No. 1, 152.-169. lpp. ISSN 2256-0386. e-ISSN 2256-0394. Pieejams: doi:10.2478/eb-2019-0011

Publikācijas valoda
English (en)