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Learning and the size of the government spending multiplier

Ewoud Quaghebeur (UGent)
(2019) MACROECONOMIC DYNAMICS. 23(8). p.3189-3224
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Abstract
This paper examines the government spending multiplier when economic agents combine adaptive learning and knowledge about future fiscal policy to form their expectations. The analysis shows that the effects of a government spending shock substantially change when the rational expectations hypothesis is replaced by this learning mechanism. In contrast to the dynamics under rational expectations, a government spending shock in a small-scale new Keynesian DSGE model with learning crowds in private consumption and is associated with a positive comovement between real wages and hours worked. In the baseline calibration, the output multiplier under learning is above one and about twice as large as under rational expectations.
Keywords
Adaptive Learning, DSGE, Fiscal Multipliers, Government Spending, FISCAL-POLICY, NONSEPARABLE PREFERENCES, BUSINESS CYCLES, EXPECTATIONS, CONSUMPTION, PRICES

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Citation

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MLA
Quaghebeur, Ewoud. “Learning and the Size of the Government Spending Multiplier.” MACROECONOMIC DYNAMICS, vol. 23, no. 8, 2019, pp. 3189–224, doi:10.1017/s1365100518000019.
APA
Quaghebeur, E. (2019). Learning and the size of the government spending multiplier. MACROECONOMIC DYNAMICS, 23(8), 3189–3224. https://doi.org/10.1017/s1365100518000019
Chicago author-date
Quaghebeur, Ewoud. 2019. “Learning and the Size of the Government Spending Multiplier.” MACROECONOMIC DYNAMICS 23 (8): 3189–3224. https://doi.org/10.1017/s1365100518000019.
Chicago author-date (all authors)
Quaghebeur, Ewoud. 2019. “Learning and the Size of the Government Spending Multiplier.” MACROECONOMIC DYNAMICS 23 (8): 3189–3224. doi:10.1017/s1365100518000019.
Vancouver
1.
Quaghebeur E. Learning and the size of the government spending multiplier. MACROECONOMIC DYNAMICS. 2019;23(8):3189–224.
IEEE
[1]
E. Quaghebeur, “Learning and the size of the government spending multiplier,” MACROECONOMIC DYNAMICS, vol. 23, no. 8, pp. 3189–3224, 2019.
@article{8636171,
  abstract     = {{This paper examines the government spending multiplier when economic agents combine adaptive learning and knowledge about future fiscal policy to form their expectations. The analysis shows that the effects of a government spending shock substantially change when the rational expectations hypothesis is replaced by this learning mechanism. In contrast to the dynamics under rational expectations, a government spending shock in a small-scale new Keynesian DSGE model with learning crowds in private consumption and is associated with a positive comovement between real wages and hours worked. In the baseline calibration, the output multiplier under learning is above one and about twice as large as under rational expectations.}},
  author       = {{Quaghebeur, Ewoud}},
  issn         = {{1365-1005}},
  journal      = {{MACROECONOMIC DYNAMICS}},
  keywords     = {{Adaptive Learning,DSGE,Fiscal Multipliers,Government Spending,FISCAL-POLICY,NONSEPARABLE PREFERENCES,BUSINESS CYCLES,EXPECTATIONS,CONSUMPTION,PRICES}},
  language     = {{eng}},
  number       = {{8}},
  pages        = {{3189--3224}},
  title        = {{Learning and the size of the government spending multiplier}},
  url          = {{http://doi.org/10.1017/s1365100518000019}},
  volume       = {{23}},
  year         = {{2019}},
}
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