Perendia, G and Tsoukis, C (2021) News, fiscal rules and the Keynesian multiplier in a DSGE model. Journal of Development Economics and Finance, 1 (1). pp. 61-91. ISSN 2582-5194

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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
Additional Information: The final published version of this article and all relevant information related to it, including copyrights, can be found online at; http://arfjournals.com/index.php?route=product/product/volumearticle&vissue_id=44&issue_id=64&product_id=411
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: 12 May 2021 13:05
URI: https://keele-test.eprints-hosting.org/id/eprint/8404

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