Working paper

An Analytical Characterization of Noisy Fiscal Policy

Patrick Fève, Tannous Kass-Hanna, and Mario Pietrunti

Abstract

This paper provides an analytical characterization of the effects of noisy news shocks on fiscal policy. We consider a small-scale Dynamic Stochastic General Equilibrium (DSGE) model with capital accumulation and endogenous labor supply and show that noise dampens the propagation of anticipated fiscal policy over the business cycle, thus reducing the fiscal multiplier.

Keywords

Government spending shocks; Expected shocks; Noisy Information; DSGE Models;

JEL codes

  • C32: Time-Series Models • Dynamic Quantile Regressions • Dynamic Treatment Effect Models • Diffusion Processes
  • E62: Fiscal Policy

Replaced by

Patrick Fève, Tannous Kass-Hanna, and Mario Pietrunti, An Analytical Characterization of Noisy Fiscal Policy, Economics Letters, Elsevier, vol. 148, November 2016, pp. 76–79.

Reference

Patrick Fève, Tannous Kass-Hanna, and Mario Pietrunti, An Analytical Characterization of Noisy Fiscal Policy, TSE Working Paper, n. 16-696, September 2016.

See also

Published in

TSE Working Paper, n. 16-696, September 2016