The Keynesian multiplier, news and fiscal policy rules in a DSGE model

George Perendia () and Christopher Tsoukis

No 25, Dynare Working Papers from CEPREMAP

Abstract: We extend the standard Smets-Wouters (2007) medium-sized DSGE model in two directions, namely to analyse the effects of news and the Keynesian multiplier, and secondly to incorporate a fiscal policy rule. We show that both the news channel and the government spending fiscal policy rule significantly improve the model fit to data. News shows up significantly, but most of its contribution comes from the fiscal rule as opposed to consumption. We then calculate the fiscal multipliers which appear more Keynesian (with a higher effect on output and a positive effect on consumption, more persistent) than argued in much preceding literature.

Keywords: DSGE model; news; fiscal policy; Taylor rule; Keynesian multiplier (search for similar items in EconPapers)
JEL-codes: E12 E62 O23 (search for similar items in EconPapers)
Pages: 50 pages
Date: 2012-12
New Economics Papers: this item is included in nep-dge and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5) Track citations by RSS feed

Downloads: (external link)
https://www.dynare.org/wp-repo/dynarewp025.pdf Main text (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpm:dynare:025

Access Statistics for this paper

More papers in Dynare Working Papers from CEPREMAP Contact information at EDIRC.
Bibliographic data for series maintained by Sébastien Villemot ().