EXPECTATIONS, STAGNATION, AND FISCAL POLICY: A NONLINEAR ANALYSIS

• 成果类型: Article
• 署名作者: Evans, George W.; Honkapohja, Seppo; Mitra, Kaushik
• 署名单位: University of Oregon; University of St Andrews; Aalto University; University of Birmingham
• 刊物名称: INTERNATIONAL ECONOMIC REVIEW
• ISSN/ISSBN: 0020-6598
• DOI: 10.1111/iere.12573
• 发表日期: 2022
• 页码: 1397-1425
• 关键词: rational-expectations; liquidity traps; monetary-policy; interest-rates; MODEL; equilibria; Sentiment; DYNAMICS; debt

摘要

Stagnation and fiscal policy are examined in a nonlinear stochastic New-Keynesian model with adaptive learning. There are three steady states. The steady state targeted by policy is locally but not globally stable under learning. A severe pessimistic expectations shock can trap the economy in a stagnation regime, underpinned by a low-level steady state, with falling inflation and output. A large fiscal stimulus may be needed to avoid or emerge from stagnation, and the impacts of forward guidance, credit frictions, central bank credibility, and policy delay are studied. Our model encompasses a wide range of outcomes arising from pessimistic expectations shocks.