Global effects of fiscal stimulus during the crisis

Forecasting and Policy Making

“…For example, European Commission staff have been using a medium-size DSGE model with a detailed fiscal sector named QUEST for the analysis of euro area fiscal stimulus and consolidation policies (see Ratto et al (2009) and Roeger and in 't Veld (2010)). Staff of the International Monetary Fund have developed a fairly large DSGE model, named GIMF, for the joint analysis of monetary and fiscal policies (see Freedman et al (2010)). Interestingly, the European Central Bank has replaced its earlier, more traditional Area-Wide Model of Fagan et al (2005) which featured largely backwardlooking dynamics, with a New-Area-Wide Model (see Christoffel et al (2008)) of the DSGE variety in the ECB staff forecasting process.…”

The Macroeconomic Effects of the Euro Area's Fiscal Consolidation 2011-2013: A Simulation-Based Approach

“…Hence, we add public capital also to the Euro Area bloc of the NAWM, so as to be able to distinguish between cuts of public investment and public consumption. The elasticity of private production with respect to public capital has been calibrated as in Freedman et al (2010) and Stähler and Thomas (2012). In particular, private sector output Y f,t is now determined by…”

“…However, Queijo von Heideken (2009), Gelain and Kulikov (2011) and Christiano et al (2010) provide evidence that such frictions matter in the EA by estimating DSGE models extended by a financial accelerator along the lines of Bernanke et al (1999) (henceforth referred to as BGG). Furthermore, Carrillo and Poilly (2013) and Freedman et al (2010) show that in the presence of a zero lower bound on nominal interest rates, a financial accelerator enhances the effect of fiscal policy shocks. We therefore introduce a simplified version of the Financial Accelerator to the models, which we discuss in more detail in the appendix, and which up to the first order yields the same key relations as the BGG approach.…”

Fiscal imbalances and output crises in Europe: will the fiscal compact help or hinder?

“…Much of the recent literature has focused on these issues (see, for example, von Hagen and Strauch 2001, Tsibouris et al 2006, Elmendorf and Furman 2008, Ilzetzki et al 2009, Alesina 2010, Freedman et al 2010, IMF 2010, and Romer and Romer 2010.…”