Rethinking Multipliers in a Globalized World
This paper uses the central tool of an investment-savings and monetary-policy model with an augmented Philips curve and presents a few extensions of that model to analyze the multiplier effects of macroeconomic policies in the United States. In doi...
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| Format: | Policy Research Working Paper |
| Language: | English |
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2012
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| Online Access: | http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20100423133702 http://hdl.handle.net/10986/3764 |
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okr-10986-3764 |
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oai_dc |
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Digital Repository |
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Foreign Institution |
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Digital Repositories |
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World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English |
| topic |
ADVANCED COUNTRIES ADVANCED ECONOMIES AGGREGATE DEMAND AGGREGATE SUPPLY AGGREGATE SUPPLY CURVE ASSET PRICES ASSET VALUES ASSETS AVAILABILITY OF CREDIT BALANCE SHEET BALANCE SHEETS BANK INTEREST RATE BANKING SECTOR BANKRUPTCY BOND BOOM-BUST CYCLES BUDGET CONSTRAINT BUSINESS CYCLES CAPITAL ASSETS CAPITAL GAINS CAPITAL INFLOWS CAPITAL INVESTMENT CAPITAL MARKET CAPITALIZATION CENTRAL BANK CENTRAL BANKS CLOSED ECONOMIES CLOSED ECONOMY COLLATERAL COMMODITY COMMODITY PRICES CONSUMER DURABLES CONSUMER SPENDING CONSUMERS CONSUMPTION FUNCTION CORPORATE TAXES CREDIT CONSTRAINED FIRMS CREDIT MARKET CREDIT MARKETS CREDIT SPREADS CREDITOR CREDITS CURRENT ACCOUNT DEBT DEPOSITS DERIVATIVE DEVALUATION DEVELOPING COUNTRIES DEVELOPING ECONOMIES DEVELOPMENT POLICY DISCRETIONARY FISCAL POLICY DISPOSABLE INCOME DOMESTIC BONDS DOMESTIC ECONOMY DOMESTIC INFLATION ECONOMIC ACTIVITY ECONOMIC AGENTS ECONOMIC CRISIS ECONOMIC OUTLOOK ECONOMIC POLICY ECONOMIC RESEARCH ELASTICITY EMERGING ECONOMIES EMERGING MARKET EMERGING MARKET COUNTRIES ENDOGENOUS VARIABLES EQUILIBRIUM EXCHANGE RATE EXCHANGE RATE REGIMES EXCHANGE RATES EXPANSIONARY FISCAL POLICY EXPANSIONARY POLICIES EXPOSURE FEDERAL RESERVE FINANCES FINANCIAL ASSETS FINANCIAL CONTAGION FINANCIAL CRISIS FINANCIAL DISTRESS FINANCIAL INNOVATION FINANCIAL INSTITUTIONS FINANCIAL INTERMEDIARIES FINANCIAL INTERMEDIATION FINANCIAL MARKET FINANCIAL SYSTEM FISCAL POLICY FISCAL STIMULUS FIXED EXCHANGE RATE FLEXIBLE EXCHANGE RATE FLEXIBLE EXCHANGE RATE REGIME FOREIGN COMPETITION FOREIGN INTEREST FOREIGN INTEREST RATE FOREIGN INTEREST RATES FOREIGN TRADE GDP GLOBAL ECONOMY GOVERNMENT BOND GOVERNMENT BONDS GOVERNMENT BUDGET GOVERNMENT DEFICIT GOVERNMENT EXPENDITURE GOVERNMENT SPENDING GROSS DOMESTIC PRODUCT HEDGE FUNDS HOLDING HOLDINGS HOUSEHOLD WEALTH HOUSEHOLDS INCOME INCOME LEVEL INCOME TAX INFLATION INFLATION EXPECTATIONS INFLATION RATE INSTRUMENT INSURANCE POLICIES INTEREST ON BONDS INTEREST PAYMENTS INTEREST RATE INTEREST RATES INTERNATIONAL BANK INTERNATIONAL FINANCE INTERNATIONAL FINANCIAL MARKETS INTERNATIONAL MONETARY FUND INTERNATIONAL TRADE INVESTMENT DECISION INVESTMENT DECISIONS INVESTMENT FUNCTION INVESTMENT VEHICLE LIFE-INSURANCE LIQUIDITY LOAN LOAN RATE MACROECONOMIC POLICIES MACROECONOMICS MARGINAL PROPENSITY TO CONSUME MARGINAL PROPENSITY TO IMPORT MARKET CONTAGION MARKET LENDING MARKET PRICE MARKET VALUE MARKET VALUES MONETARY ASSETS MONETARY ECONOMICS MONETARY FUND MONETARY POLICIES MONETARY POLICY MONETARY POLICY REACTION FUNCTION MONETARY POLICY RULE MONETARY TRANSMISSION MONETARY TRANSMISSION MECHANISM MONEY CREATION MONEY MARKET MONEY SUPPLY MORTGAGE MORTGAGE-BACKED SECURITIES MULTIPLIER EFFECTS MULTIPLIERS NATIONAL INCOME NET EXPORTS NET WORTH NOMINAL EXCHANGE RATE NOMINAL INTEREST RATE OPEN ECONOMIES OPEN ECONOMY OUTPUT OUTPUT GAP PENSION PENSION FUNDS PERMANENT INCOME PERPETUITY PERSONAL INCOME PHILLIPS CURVE POLICY RESPONSE PRICE ELASTICITY PRIVATE INVESTMENT PROBABILITY OF DEFAULT PUBLIC FINANCES PUBLIC INVESTMENT PUBLIC SPENDING REAL ESTATE REAL INTEREST REAL INTEREST RATE RECEIPTS RECESSION RECESSIONS REINVESTMENT SAVINGS SPECULATIVE BUBBLES STOCK MARKET STOCK MARKETS STOCK PRICE STOCK PRICES STOCKS TAX TAX RATE TERMS OF CAPITAL TOTAL DEBT TRADE BALANCE TRADE BALANCES UNEMPLOYMENT WEALTH WORLD MARKETS WORLD TRADE |
| spellingShingle |
ADVANCED COUNTRIES ADVANCED ECONOMIES AGGREGATE DEMAND AGGREGATE SUPPLY AGGREGATE SUPPLY CURVE ASSET PRICES ASSET VALUES ASSETS AVAILABILITY OF CREDIT BALANCE SHEET BALANCE SHEETS BANK INTEREST RATE BANKING SECTOR BANKRUPTCY BOND BOOM-BUST CYCLES BUDGET CONSTRAINT BUSINESS CYCLES CAPITAL ASSETS CAPITAL GAINS CAPITAL INFLOWS CAPITAL INVESTMENT CAPITAL MARKET CAPITALIZATION CENTRAL BANK CENTRAL BANKS CLOSED ECONOMIES CLOSED ECONOMY COLLATERAL COMMODITY COMMODITY PRICES CONSUMER DURABLES CONSUMER SPENDING CONSUMERS CONSUMPTION FUNCTION CORPORATE TAXES CREDIT CONSTRAINED FIRMS CREDIT MARKET CREDIT MARKETS CREDIT SPREADS CREDITOR CREDITS CURRENT ACCOUNT DEBT DEPOSITS DERIVATIVE DEVALUATION DEVELOPING COUNTRIES DEVELOPING ECONOMIES DEVELOPMENT POLICY DISCRETIONARY FISCAL POLICY DISPOSABLE INCOME DOMESTIC BONDS DOMESTIC ECONOMY DOMESTIC INFLATION ECONOMIC ACTIVITY ECONOMIC AGENTS ECONOMIC CRISIS ECONOMIC OUTLOOK ECONOMIC POLICY ECONOMIC RESEARCH ELASTICITY EMERGING ECONOMIES EMERGING MARKET EMERGING MARKET COUNTRIES ENDOGENOUS VARIABLES EQUILIBRIUM EXCHANGE RATE EXCHANGE RATE REGIMES EXCHANGE RATES EXPANSIONARY FISCAL POLICY EXPANSIONARY POLICIES EXPOSURE FEDERAL RESERVE FINANCES FINANCIAL ASSETS FINANCIAL CONTAGION FINANCIAL CRISIS FINANCIAL DISTRESS FINANCIAL INNOVATION FINANCIAL INSTITUTIONS FINANCIAL INTERMEDIARIES FINANCIAL INTERMEDIATION FINANCIAL MARKET FINANCIAL SYSTEM FISCAL POLICY FISCAL STIMULUS FIXED EXCHANGE RATE FLEXIBLE EXCHANGE RATE FLEXIBLE EXCHANGE RATE REGIME FOREIGN COMPETITION FOREIGN INTEREST FOREIGN INTEREST RATE FOREIGN INTEREST RATES FOREIGN TRADE GDP GLOBAL ECONOMY GOVERNMENT BOND GOVERNMENT BONDS GOVERNMENT BUDGET GOVERNMENT DEFICIT GOVERNMENT EXPENDITURE GOVERNMENT SPENDING GROSS DOMESTIC PRODUCT HEDGE FUNDS HOLDING HOLDINGS HOUSEHOLD WEALTH HOUSEHOLDS INCOME INCOME LEVEL INCOME TAX INFLATION INFLATION EXPECTATIONS INFLATION RATE INSTRUMENT INSURANCE POLICIES INTEREST ON BONDS INTEREST PAYMENTS INTEREST RATE INTEREST RATES INTERNATIONAL BANK INTERNATIONAL FINANCE INTERNATIONAL FINANCIAL MARKETS INTERNATIONAL MONETARY FUND INTERNATIONAL TRADE INVESTMENT DECISION INVESTMENT DECISIONS INVESTMENT FUNCTION INVESTMENT VEHICLE LIFE-INSURANCE LIQUIDITY LOAN LOAN RATE MACROECONOMIC POLICIES MACROECONOMICS MARGINAL PROPENSITY TO CONSUME MARGINAL PROPENSITY TO IMPORT MARKET CONTAGION MARKET LENDING MARKET PRICE MARKET VALUE MARKET VALUES MONETARY ASSETS MONETARY ECONOMICS MONETARY FUND MONETARY POLICIES MONETARY POLICY MONETARY POLICY REACTION FUNCTION MONETARY POLICY RULE MONETARY TRANSMISSION MONETARY TRANSMISSION MECHANISM MONEY CREATION MONEY MARKET MONEY SUPPLY MORTGAGE MORTGAGE-BACKED SECURITIES MULTIPLIER EFFECTS MULTIPLIERS NATIONAL INCOME NET EXPORTS NET WORTH NOMINAL EXCHANGE RATE NOMINAL INTEREST RATE OPEN ECONOMIES OPEN ECONOMY OUTPUT OUTPUT GAP PENSION PENSION FUNDS PERMANENT INCOME PERPETUITY PERSONAL INCOME PHILLIPS CURVE POLICY RESPONSE PRICE ELASTICITY PRIVATE INVESTMENT PROBABILITY OF DEFAULT PUBLIC FINANCES PUBLIC INVESTMENT PUBLIC SPENDING REAL ESTATE REAL INTEREST REAL INTEREST RATE RECEIPTS RECESSION RECESSIONS REINVESTMENT SAVINGS SPECULATIVE BUBBLES STOCK MARKET STOCK MARKETS STOCK PRICE STOCK PRICES STOCKS TAX TAX RATE TERMS OF CAPITAL TOTAL DEBT TRADE BALANCE TRADE BALANCES UNEMPLOYMENT WEALTH WORLD MARKETS WORLD TRADE Nallari, Raj Mba, Leopold Engozogo Rethinking Multipliers in a Globalized World |
| geographic_facet |
The World Region The World Region |
| relation |
Policy Research working paper ; no. WPS 5277 |
| description |
This paper uses the central tool of an
investment-savings and monetary-policy model with an
augmented Philips curve and presents a few extensions of
that model to analyze the multiplier effects of
macroeconomic policies in the United States. In doing so,
the authors incorporate realistic assumptions in the model
related to the recent financial characteristics of the
global economy. The monetary policy reaction function embeds
a new augmented Taylor-rule incorporating housing and stock
prices and the credit lending rate. And the household
consumption and firm investment decisions incorporate
housing and stock assets and the credit market frictions.
The equilibrium income is derived and compared with the
actual nominal gross domestic product of the United States
for the period 1990 to 2009. More importantly, fiscal and
trade multipliers are derived and discussed. The main
finding is that government spending, tax cut, and trade
multipliers are relatively smaller in size when more
realistic features are incorporated in the model. The model
simulation shows that the model can track actual gross
domestic product reasonably well. The model should be
further improved before it could be used for policy exercises. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Nallari, Raj Mba, Leopold Engozogo |
| author_facet |
Nallari, Raj Mba, Leopold Engozogo |
| author_sort |
Nallari, Raj |
| title |
Rethinking Multipliers in a Globalized World |
| title_short |
Rethinking Multipliers in a Globalized World |
| title_full |
Rethinking Multipliers in a Globalized World |
| title_fullStr |
Rethinking Multipliers in a Globalized World |
| title_full_unstemmed |
Rethinking Multipliers in a Globalized World |
| title_sort |
rethinking multipliers in a globalized world |
| publishDate |
2012 |
| url |
http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20100423133702 http://hdl.handle.net/10986/3764 |
| _version_ |
1764388205654704128 |
| spelling |
okr-10986-37642021-04-23T14:02:12Z Rethinking Multipliers in a Globalized World Nallari, Raj Mba, Leopold Engozogo ADVANCED COUNTRIES ADVANCED ECONOMIES AGGREGATE DEMAND AGGREGATE SUPPLY AGGREGATE SUPPLY CURVE ASSET PRICES ASSET VALUES ASSETS AVAILABILITY OF CREDIT BALANCE SHEET BALANCE SHEETS BANK INTEREST RATE BANKING SECTOR BANKRUPTCY BOND BOOM-BUST CYCLES BUDGET CONSTRAINT BUSINESS CYCLES CAPITAL ASSETS CAPITAL GAINS CAPITAL INFLOWS CAPITAL INVESTMENT CAPITAL MARKET CAPITALIZATION CENTRAL BANK CENTRAL BANKS CLOSED ECONOMIES CLOSED ECONOMY COLLATERAL COMMODITY COMMODITY PRICES CONSUMER DURABLES CONSUMER SPENDING CONSUMERS CONSUMPTION FUNCTION CORPORATE TAXES CREDIT CONSTRAINED FIRMS CREDIT MARKET CREDIT MARKETS CREDIT SPREADS CREDITOR CREDITS CURRENT ACCOUNT DEBT DEPOSITS DERIVATIVE DEVALUATION DEVELOPING COUNTRIES DEVELOPING ECONOMIES DEVELOPMENT POLICY DISCRETIONARY FISCAL POLICY DISPOSABLE INCOME DOMESTIC BONDS DOMESTIC ECONOMY DOMESTIC INFLATION ECONOMIC ACTIVITY ECONOMIC AGENTS ECONOMIC CRISIS ECONOMIC OUTLOOK ECONOMIC POLICY ECONOMIC RESEARCH ELASTICITY EMERGING ECONOMIES EMERGING MARKET EMERGING MARKET COUNTRIES ENDOGENOUS VARIABLES EQUILIBRIUM EXCHANGE RATE EXCHANGE RATE REGIMES EXCHANGE RATES EXPANSIONARY FISCAL POLICY EXPANSIONARY POLICIES EXPOSURE FEDERAL RESERVE FINANCES FINANCIAL ASSETS FINANCIAL CONTAGION FINANCIAL CRISIS FINANCIAL DISTRESS FINANCIAL INNOVATION FINANCIAL INSTITUTIONS FINANCIAL INTERMEDIARIES FINANCIAL INTERMEDIATION FINANCIAL MARKET FINANCIAL SYSTEM FISCAL POLICY FISCAL STIMULUS FIXED EXCHANGE RATE FLEXIBLE EXCHANGE RATE FLEXIBLE EXCHANGE RATE REGIME FOREIGN COMPETITION FOREIGN INTEREST FOREIGN INTEREST RATE FOREIGN INTEREST RATES FOREIGN TRADE GDP GLOBAL ECONOMY GOVERNMENT BOND GOVERNMENT BONDS GOVERNMENT BUDGET GOVERNMENT DEFICIT GOVERNMENT EXPENDITURE GOVERNMENT SPENDING GROSS DOMESTIC PRODUCT HEDGE FUNDS HOLDING HOLDINGS HOUSEHOLD WEALTH HOUSEHOLDS INCOME INCOME LEVEL INCOME TAX INFLATION INFLATION EXPECTATIONS INFLATION RATE INSTRUMENT INSURANCE POLICIES INTEREST ON BONDS INTEREST PAYMENTS INTEREST RATE INTEREST RATES INTERNATIONAL BANK INTERNATIONAL FINANCE INTERNATIONAL FINANCIAL MARKETS INTERNATIONAL MONETARY FUND INTERNATIONAL TRADE INVESTMENT DECISION INVESTMENT DECISIONS INVESTMENT FUNCTION INVESTMENT VEHICLE LIFE-INSURANCE LIQUIDITY LOAN LOAN RATE MACROECONOMIC POLICIES MACROECONOMICS MARGINAL PROPENSITY TO CONSUME MARGINAL PROPENSITY TO IMPORT MARKET CONTAGION MARKET LENDING MARKET PRICE MARKET VALUE MARKET VALUES MONETARY ASSETS MONETARY ECONOMICS MONETARY FUND MONETARY POLICIES MONETARY POLICY MONETARY POLICY REACTION FUNCTION MONETARY POLICY RULE MONETARY TRANSMISSION MONETARY TRANSMISSION MECHANISM MONEY CREATION MONEY MARKET MONEY SUPPLY MORTGAGE MORTGAGE-BACKED SECURITIES MULTIPLIER EFFECTS MULTIPLIERS NATIONAL INCOME NET EXPORTS NET WORTH NOMINAL EXCHANGE RATE NOMINAL INTEREST RATE OPEN ECONOMIES OPEN ECONOMY OUTPUT OUTPUT GAP PENSION PENSION FUNDS PERMANENT INCOME PERPETUITY PERSONAL INCOME PHILLIPS CURVE POLICY RESPONSE PRICE ELASTICITY PRIVATE INVESTMENT PROBABILITY OF DEFAULT PUBLIC FINANCES PUBLIC INVESTMENT PUBLIC SPENDING REAL ESTATE REAL INTEREST REAL INTEREST RATE RECEIPTS RECESSION RECESSIONS REINVESTMENT SAVINGS SPECULATIVE BUBBLES STOCK MARKET STOCK MARKETS STOCK PRICE STOCK PRICES STOCKS TAX TAX RATE TERMS OF CAPITAL TOTAL DEBT TRADE BALANCE TRADE BALANCES UNEMPLOYMENT WEALTH WORLD MARKETS WORLD TRADE This paper uses the central tool of an investment-savings and monetary-policy model with an augmented Philips curve and presents a few extensions of that model to analyze the multiplier effects of macroeconomic policies in the United States. In doing so, the authors incorporate realistic assumptions in the model related to the recent financial characteristics of the global economy. The monetary policy reaction function embeds a new augmented Taylor-rule incorporating housing and stock prices and the credit lending rate. And the household consumption and firm investment decisions incorporate housing and stock assets and the credit market frictions. The equilibrium income is derived and compared with the actual nominal gross domestic product of the United States for the period 1990 to 2009. More importantly, fiscal and trade multipliers are derived and discussed. The main finding is that government spending, tax cut, and trade multipliers are relatively smaller in size when more realistic features are incorporated in the model. The model simulation shows that the model can track actual gross domestic product reasonably well. The model should be further improved before it could be used for policy exercises. 2012-03-19T18:39:24Z 2012-03-19T18:39:24Z 2010-04-01 http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20100423133702 http://hdl.handle.net/10986/3764 English Policy Research working paper ; no. WPS 5277 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank Publications & Research :: Policy Research Working Paper The World Region The World Region |