Fiscal Policy in a Tractable Liquidity-Constrained Economy

• 成果类型: Article
• 署名作者: Challe, Edouard; Ragot, Xavier
• 署名单位: Institut Polytechnique de Paris; Ecole Polytechnique
• 刊物名称: ECONOMIC JOURNAL
• ISSN/ISSBN: 0013-0133
• DOI: 10.1111/j.1468-0297.2010.02399.x
• 发表日期: 2011
• 页码: 273-317
• 关键词: optimum quantity; government debt; PRIVATE; MARKETS; shocks; MODEL; RISK

摘要

We analyse the effects of fiscal expansions when public debt is used as liquidity by the private sector. Aggregate shocks are introduced into an incomplete-market economy where heterogenous agents face occasionally binding borrowing constraints and store wealth to smooth out idiosyncratic income fluctuations. Debt-financed increases in spending facilitate self-insurance by bond holders and may crowd in private consumption. They also loosen the borrowing constraints faced by firms, thereby raising labour demand and possibly the real wage. Whether private consumption and wages rise or fall ultimately depends on the relative strengths of the liquidity and wealth effects that arise following the shock.