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Abstract
This study summarizes a theory of the origin of the current world economic crisis and the role of fiscal policy in mitigating its effect. The perspective is dynamic stochastic general equilibrium analysis. Overall, the model analysis suggests a strong case for fiscal policy if the monetary authority is unable/unwilling to close the output gap. This remains the case, even when explicitly taking into account public debt dynamics.
Published Online: 2019-11-30
Published in Print: 2014-05-01
© 2019 by Walter de Gruyter Berlin/Boston
