Great Recession, Slow Recovery and Muted Fiscal Policies in the US

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Title: Great Recession, Slow Recovery and Muted Fiscal Policies in the US
Authors: Albonico, Alice
Paccagnini, Alessia
Tirelli, Patrizio
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Date: Mar-2016
Abstract: This paper reconsiders the role of macroeconomic shocks and policies in determining the Great Recession and the subsequent recovery in the US. The Great Recession was mainly caused by a large demand shock and by the ZLB on the interest rate policy. In contrast with previous findings, the subsequent jobless recovery is explained by the ZLB effect. We estimate a fraction of non-Ricardian households which is close to 50%, and obtain comparatively large fiscal multipliers. However we cannot detect a significant contribution of fiscal policies in stabilizing the US economy. For instance, the 2007-2009 large increase in expenditure-to-GDP ratios was apparently determined by the adverse non-policy shocks that caused the recession.
Type of material: Working Paper
Publisher: University College Dublin. School of Economics
Start page: 1
End page: 39
Series/Report no.: UCD Centre for Economic Research Working Paper Series; WP2016/02
Keywords: DSGELimited asset market participationBayesian estimationUS economyBusiness cycleMonetary policyFiscal policy
Language: en
Status of Item: Not peer reviewed
Appears in Collections:Economics Working Papers & Policy Papers

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