Vector Autoregressions
Vector Autoregressions
Vector Autoregressions
SHOW LESS
You also want an ePaper? Increase the reach of your titles
YUMPU automatically turns print PDFs into web optimized ePapers that Google loves.
Fiscal Theory• Equation depicting payments to governmentbondholders:B 0 1t ∑ t0Tt −1rG t P 0• Standard Fiscal Theory– Price level flexible– When G or T changes, P 0 adjusts immediately• Fiscal Theory with sticky prices– G jumps or T drops implies r falls– Low r stimulates consumption• To explore Fiscal Theory story, must check whatTo explore Fiscal Theory story, must check whathappens to r after fiscal shock.
Change language