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Abstract

This study summarizes a theory of the origin of the current world economic crisis and the role of fiscal policy in mitigating its effect. The perspective is dynamic stochastic general equilibrium analysis. Overall, the model analysis suggests a strong case for fiscal policy if the monetary authority is unable/unwilling to close the output gap. This remains the case, even when explicitly taking into account public debt dynamics.

Citation

Gauti B. Eggertsson, 2014. “Fiscal Policy, Public Debt and the World Crisis,” German Economic Review, Verein für Socialpolitik, vol. 15(2), pages 225-242, May.

@article{eggertsson2014fiscal,
  title = {Fiscal Policy, Public Debt, and the World Crisis},
  author = {Eggertsson, Gauti B.},
  journal = {German Economic Review},
  volume = {15},
  number = {2},
  pages = {225--242},
  year = {2014},
  doi = {10.1111/geer.12037},
}