Abstract 7Does scal policy have large and qualitatively dierent eects on the economy when the nominal interest rate is zero? An emerging consensus in the New Keynesian (NK) literature is that the answer to this question is yes. Evidence presented here suggests that the NK model's implications for scal policy at the zero bound may not be all that dierent from its implications for policy away from it. For a range of empirically relevant parameterizations, employment increases when the labor tax rate is cut and …
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