Perendia, G and Tsoukis, C ORCID: https://orcid.org/0000-0001-5199-631X (2020) News, fiscal rules and the Keynesian multiplier in a DSGE model. Journal of Development Economics and Finance. (In Press)

[img] Text
DSGENews-Perendia-Tsoukis-June20.pdf - Accepted Version
Restricted to Repository staff only until 14 July 2021.
Available under License Creative Commons Attribution Non-commercial.

Download (774kB)

Abstract

We extend the standard Smets-Wouters (2007) medium-sized DSGE model to analyse the effects of news and the Keynesian multiplier. News is modelled in a novel way compared to the literature, as revisions of expectations regarding future fundamentals. News-driven expectations changes augment both the consumption Euler equation and a fiscal rule, which is a secondary innovation of the paper. This news channel significantly improves the model fit to data. We 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.

Item Type: Article
Uncontrolled Keywords: DSGE model, news, fiscal policy rule, Keynesian multiplier
Subjects: H Social Sciences > HA Statistics
H Social Sciences > HB Economic Theory
H Social Sciences > HF Commerce > HF5410 Marketing. Distribution of products
H Social Sciences > HF Commerce > HF5601 Accounting. Bookkeeping
H Social Sciences > HG Finance
Divisions: Faculty of Humanities and Social Sciences > Keele Business School
Depositing User: Symplectic
Date Deposited: 22 Jul 2020 08:14
Last Modified: 22 Jul 2020 08:14
URI: https://eprints.keele.ac.uk/id/eprint/8404

Actions (login required)

View Item View Item