We study the effects of expansionary fiscal shocks in a two-country DSGE model with perpetual youth. We consider two alternative financing regimes, monetary financing and debt financing, and find that a money-financed fiscal stimulus is more expansionary on output and inflation. We investigate how the transmission mechanism is related to the open-economy dimension and how structural parameters affect macroeconomic dynamics. © 2018 Elsevier B.V. All rights reserved
Fiscal shocks and helicopter money in open economy / Di Giorgio, Giorgio; Traficante, Guido. - In: ECONOMIC MODELLING. - ISSN 0264-9993. - 74:August 2018(2018), pp. 77-87. [10.1016/j.econmod.2018.05.005]
Fiscal shocks and helicopter money in open economy
DI GIORGIO G.;TRAFICANTE G.
2018
Abstract
We study the effects of expansionary fiscal shocks in a two-country DSGE model with perpetual youth. We consider two alternative financing regimes, monetary financing and debt financing, and find that a money-financed fiscal stimulus is more expansionary on output and inflation. We investigate how the transmission mechanism is related to the open-economy dimension and how structural parameters affect macroeconomic dynamics. © 2018 Elsevier B.V. All rights reserved
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