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A Peer-reviewed scientific articles/A1 Journal article (refereed), original research
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Fiscal Policy Multipliers in an RBC Model with Learning, Macroeconomic Dynamics 1 (2019). Mitra, Kaushik; Evans, George W. Evans; Honkapohja, Seppo

Category A Peer-reviewed scientific articles
Sub-category A1 Journal article (refereed), original research
auki Internal authors
Honkapohja Seppo / Bank of Finland
All authors as text Mitra, Kaushik; Evans, George W. Evans; Honkapohja, Seppo 
Number of authors
Status Published
Year of publication 2019 
Date 15.01.2019 
Name of article Fiscal Policy Multipliers in an RBC Model with Learning 
Name of journal Macroeconomic Dynamics
Volume of issue 23 
Number of issue
Pages 240-283 
Abstract Using the standard real business cycle model with lump-sum taxes, we analyze the impact of fiscal policy when agents form expectations using adaptive learning rather than rational expectations (RE). The output multipliers for government purchases are significantly higher under learning, and fall within empirical bounds reported in the literature, which is in sharp contrast to the implausibly low values under RE. Positive effects of fiscal policy are demonstrated during times of economic stress like the recent Great Recession. Finally, it is shown how learning can lead to consumption and investment dynamics empirically documented during some episodes of “fiscal consolidations.”
Free text descriptor in Finnish finanssipolitiikka; verotus; julkiset hankinnat; odotukset; oppiminen; 
Free text descriptor in English Government Purchases, Expectations, Output Multiplier, Fiscal Consolidation, Taxation 
ISSN / e-ISSN 1365-1005 
auki Internet addresses
Additional information Published online: 11 July 2017
Notes BoF DP 5/2012 
Open Access Not known

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