2013/06/01 by Isabel Correia, Emmanuel Farhi, Juan Pablo Nicolini +1 · 1 citation
Economics, Econometrics and Finance · #Economic Theory and Policy #Economics #Fiscal Policies and Political Economy #Fiscal policy #Interest rate #Keynesian economics #Macroeconomics #Monetary Policy and Economic Impact #Monetary economics #Monetary policy #New Keynesian economics #Nominal interest rate #Real interest rate #Stimulus (psychology) #Zero lower bound
paper · doi:10.1257/aer.103.4.1172
openalex publication_date 2013/06/01 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/26
When the zero lower bound on nominal interest rates binds, monetary policy cannot provide appropriate stimulus. We show that, in the standard New Keynesian model, tax policy can deliver such stimulus at no cost and in a time-consistent manner. There is no need to use inefficient policies such as wasteful public spending or future commitments to low interest rates. (JEL E12, E43, E52, E62, H20)