Rethinking Multipliers in a Globalized World

Nallari, Raj ; Mba, Leopold Engozogo

关键词: ADVANCED COUNTRIES;    ADVANCED ECONOMIES;    AGGREGATE DEMAND;    AGGREGATE SUPPLY;    AGGREGATE SUPPLY CURVE;   

DOI  :  10.1596/1813-9450-5277
RP-ID  :  WPS5277

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

This paper uses the central tool of aninvestment-savings and monetary-policy model with anaugmented Philips curve and presents a few extensions ofthat model to analyze the multiplier effects ofmacroeconomic policies in the United States. In doing so,the authors incorporate realistic assumptions in the modelrelated to the recent financial characteristics of theglobal economy. The monetary policy reaction function embedsa new augmented Taylor-rule incorporating housing and stockprices and the credit lending rate. And the householdconsumption and firm investment decisions incorporatehousing and stock assets and the credit market frictions.The equilibrium income is derived and compared with theactual nominal gross domestic product of the United Statesfor the period 1990 to 2009. More importantly, fiscal andtrade multipliers are derived and discussed. The mainfinding is that government spending, tax cut, and trademultipliers are relatively smaller in size when morerealistic features are incorporated in the model. The modelsimulation shows that the model can track actual grossdomestic product reasonably well. The model should befurther improved before it could be used for policy exercises.