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The Aggregate and Distributional Effects of Fiscal Stimuli

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  • Paweł Kopiec

Abstract

This paper compares the aggregate and distributional effects of three fiscal policy instruments: government expenditures, unemployment benefits and transfers. To this end, the Diamond-Mortensen-Pissarides model of frictional labor market is embedded into an otherwise standard Heterogeneous Agent New Keynesian framework. The model calibrated to match the moments characterizing the US economy successfully replicates the empirical distributions of households across: disposable income, consumption expenditures and net worth. The solution method developed by Reiter (2009) is applied to quantify the aggregate and distributional responses to changes in the analyzed fiscal measures. Moreover, the stabilizing role of government expenditures, unemployment benefits and transfers is assessed.

Suggested Citation

  • Paweł Kopiec, 2022. "The Aggregate and Distributional Effects of Fiscal Stimuli," KAE Working Papers 2022-070, Warsaw School of Economics, Collegium of Economic Analysis.
    • Handle: RePEc:sgh:kaewps:2022070
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    References listed on IDEAS

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    More about this item

    Keywords

    Heterogeneous Agents; Frictional Markets; Fiscal Stimulus;
    All these keywords.

    JEL classification:

    • D30 - Microeconomics - - Distribution - - - General
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household

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