H3 - Fiscal Policies and Behavior of Economic Agents

• COVID and Financial Stability: Practice Ahead of Theory

  Staff Discussion Paper 2022-18 Jing Yang, Hélène Desgagnés, Grzegorz Halaj, Yaz Terajima

  The Covid-19 pandemic uncovered policy challenges related to the economic measures that were taken to support the economy. Two years later, we attempt to identify the broader impact of these measures and research that needs to follow.

  Content Type(s): Staff research, Staff discussion papers Topic(s): Coronavirus disease (COVID-19), Financial stability, Financial system regulation and policies JEL Code(s): E, E5, E58, E6, E61, G, G2, G21, H, H3, H8, H84

• Monetary Policy, Trends in Real Interest Rates and Depressed Demand

  Staff Working Paper 2021-27 Paul Beaudry, Césaire Meh

  Over the last few decades, real interest rates have trended downward. The most common explanation is that this reflects depressed demand due to demographic, technological and other real factors. We explore the claim that these trends may have been amplified by certain features of monetary policy.

  Content Type(s): Staff research, Staff working papers Topic(s): Debt management, Economic models, Fiscal policy, Inflation and prices, Interest rates, Monetary policy JEL Code(s): E, E2, E4, E43, E44, E5, E52, E6, E62, E63, H, H3, H6, H63

• Labor Demand Response to Labor Supply Incentives: Lessons from the German Mini-Job Reform

  Staff Working Paper 2021-15 Gabriela Galassi

  How do firms change their employment decisions when tax benefits for low-earning workers are expanded? Some firms increase employment overall, whereas others replace high-earning workers with low-earning workers, according to German linked employer-employee data.

  Content Type(s): Staff research, Staff working papers Topic(s): Economic models, Firm dynamics, Labour markets JEL Code(s): E, E2, E24, E6, E64, H, H2, H20, H24, H3, H32, I, I3, I38, J, J2, J23, J3, J38

• Child Skill Production: Accounting for Parental and Market-Based Time and Goods Investments

  Staff Working Paper 2020-36 Elizabeth Caucutt, Lance Lochner, Joseph Mullins, Youngmin Park

  Can daycare replace parents’ time spent with children? We explore this by using data on how parents spend time and money on children and how this spending is related to their child’s development.

  Content Type(s): Staff research, Staff working papers Topic(s): Fiscal policy, Labour markets, Potential output, Productivity JEL Code(s): D, D1, D13, H, H3, H31, J, J2, J22, J24

• Sources of Borrowing and Fiscal Multipliers

  Staff Working Paper 2018-32 Romanos Priftis, Srecko Zimic

  This paper finds that debt-financed government spending multipliers vary considerably depending on the location of the debt buyer. In a sample of 33 countries, we find that government spending multipliers are larger when government purchases are financed by issuing debt to foreign investors (non-residents), compared with when government purchases are financed by issuing debt to home investors (residents).

  Content Type(s): Staff research, Staff working papers Topic(s): Debt management, Economic models, Fiscal policy, International financial markets JEL Code(s): E, E2, E6, E62, F, F4, F41, H, H3

• Debt Overhang and Deleveraging in the US Household Sector: Gauging the Impact on Consumption

  Staff Working Paper 2015-47 Bruno Albuquerque, Georgi Krustev

  Using a novel dataset for the US states, this paper examines whether household debt and the protracted debt deleveraging help explain the dismal performance of US consumption since 2007, in the aftermath of the housing bubble.

  Content Type(s): Staff research, Staff working papers Topic(s): Credit and credit aggregates, Econometric and statistical methods, International topics JEL Code(s): C, C1, C13, C2, C23, C5, C52, D, D1, D12, H, H3, H31

• Uncertain Fiscal Consolidations

  Staff Working Paper 2013-26 Huixin Bi, Eric M. Leeper, Campbell Leith

  The paper explores the macroeconomic consequences of fiscal consolidations whose timing and composition - either tax- or spending-based - are uncertain.

  Content Type(s): Staff research, Staff working papers Topic(s): Economic models, Fiscal policy, Monetary policy and uncertainty JEL Code(s): E, E6, E62, E63, H, H3, H30, H6, H60
• February 23, 2012

  Household Borrowing and Spending in Canada

  Bank of Canada Review - Winter 2011-2012 Jeannine Bailliu, Katya Kartashova, Césaire Meh

  Understanding how much of the increased debt load of Canadian households has been used to finance household spending on consumption and home renovation is important for the conduct of monetary policy. In this article, the authors use a comprehensive data set that provides information on the uses of debt by Canadian households. They first present some facts regarding the evolution of Canadian household debt over the period from 1999 to 2010, emphasizing the increased importance of debt flows that are secured by housing. They then explore how Canadian households have used their borrowed funds over the same period, and assess the role of these borrowed funds in financing total consumption and spending on home renovation. Finally, they examine the possible effects of a decline in house prices on consumption when housing equity is used as collateral against household indebtedness.

  Content Type(s): Publications, Bank of Canada Review articles Topic(s): Credit and credit aggregates, Domestic demand and components, Monetary policy transmission JEL Code(s): E, E2, E21, E5, E51, H, H3, H31

• Sovereign Default Risk Premia, Fiscal Limits and Fiscal Policy

  Staff Working Paper 2011-10 Huixin Bi

  We develop a closed economy model to study the interactions among sovereign risk premia, fiscal limits, and fiscal policy. The stochastic fiscal limits, which measure the ability and willingness of the government to service its debt, arise endogenously from a dynamic Laffer curve.

  Content Type(s): Staff research, Staff working papers Topic(s): Fiscal policy, International topics JEL Code(s): E, E6, E62, H, H3, H30, H6, H60

• On Fiscal Multipliers: Estimates from a Medium Scale DSGE Model

  Staff Working Paper 2010-30 Sarah Zubairy

  This paper contributes to the debate on fiscal multipliers, in the context of a structural model. I estimate a micro-founded dynamic stochastic general equilibrium model, that features a rich fiscal policy block and a transmission mechanism for government spending shocks, using Bayesian techniques for US data.

  Content Type(s): Staff research, Staff working papers Topic(s): Economic models, Fiscal policy JEL Code(s): C, C1, C11, E, E3, E32, E6, E62, H, H3, H30