Search Results
Speech
Testimony on housing finance reform: essential elements of a government guarantee for mortgage-backed securities
Testimony before the U.S. Senate Committee on Banking, Housing and Urban Affairs, Washington, D.C.
Working Paper
Industry evidence on the effects of government spending
This paper investigates industry-level effects of government purchases in order to shed light on the transmission mechanism for government spending on the aggregate economy. We begin by highlighting the different theoretical predictions concerning the effects of government spending on industry labor market equilibrium. We then create a panel data set that matches output and labor variables to shifts in industry-specific government demand. The empirical results indicate that increases in government demand raise output and hours, but lower real product wages and productivity. Markups do not ...
Speech
The national and regional economic outlook
Remarks before the Bronx Chamber of Commerce at the New York Botanical Garden, Bronx, New York.
Report
Correlated disturbances and U.S. business cycles
The dynamic stochastic general equilibrium (DSGE) models used to study business cycles typically assume that exogenous disturbances are independent first-order autoregressions. This paper relaxes this tight and arbitrary restriction by allowing for disturbances that have a rich contemporaneous and dynamic correlation structure. Our first contribution is a new Bayesian econometric method that uses conjugate conditionals to allow for feasible and quick estimation of DSGE models with correlated disturbances. Our second contribution is a reexamination of U.S. business cycles. We find that ...
Journal Article
Can the nation stimulate its way to prosperity?
While the overall weight of the evidence suggests the stimulas plan has provided a short-term boost, it's unclear exactly how large this boost has been.
Report
Deficits, public debt dynamics, and tax and spending multipliers
Cutting government spending on goods and services increases the budget deficit if the nominal interest rate is close to zero. This is the message of a simple but standard New Keynesian DSGE model calibrated with Bayesian methods. The cut in spending reduces output and thus?holding rates for labor and sales taxes constant?reduces revenues by even more than what is saved by the spending cut. Similarly, increasing sales taxes can increase the budget deficit rather than reduce it. Both results suggest limitations of ?austerity measures? in low interest rate economies to cut budget deficits. ...
Journal Article
Veto politics : can a line-item veto reduce spending?
Related link(s): https://www.richmondfed.org/-/media/richmondfedorg/publications/research/econ_focus/2009/spring/feature4_weblinks.cfm
Working Paper
Who benefits from increased government spending? a state-level analysis
We simultaneously identify two government spending shocks: military spending shocks as defined by Ramey (2008) and federal spending shocks as defined by Perotti (2008). We analyze the effect of these shocks on state-level personal income and employment. We find regional patterns in the manner in which both shocks affect state-level variables. Moreover, we find differences in the propagation mechanisms for military versus nonmilitary spending shocks. The former benefits economies with larger manufacturing and retail sectors and states that receive military contracts. While nonmilitary shocks ...
Working Paper
Sectoral shocks, reallocation frictions, and optimal government spending
What is the optimal policy response to a negative sectoral shock? How do frictions in goods and labor markets affect the nature and speed of the process of reallocating resources across alternative uses? Should government controlled inputs be allocated to compensate for frictions faced by the private sector or, rather, should they be deployed to complement private sector decisions? In this paper we make a first attempt to understand what features of an economy determine the answers to the previous questions. We study a model in which the drop in the private demand for structures frees up ...
Working Paper
Government policy response to war-expenditure shocks
A theory of government policy determination, based on intertemporal distortion-smoothing and limited commitment, matches the set of stylized facts of U.S. wartime policy.