This chapter reviews and synthesizes our current understanding of the shocks that drive
economic fluctuations. The chapter begins with an illustration of the problem of identifying …

Abstract The Real Business Cycle (RBC) research program has grown specularly over the
last decade, as its concepts and methods have diffused into mainstream macroeconomics …

The term “austerity” indicates a policy of sizeable reduction of govern-ment deficits and
stabilization of government debt achieved by means of spending cuts or tax increases, or …

This essay briefly reviews the state of knowledge about the government spending multiplier.
Drawing on theoretical work, aggregate empirical estimates from the United States, as well …

This paper characterizes the dynamic effects of shocks in government spending and taxes
on US activity in the postwar period. It does so by using a mixed structural VAR/event study …

This paper explains the key factors that determine the output multiplier of government
purchases in New Keynesian models, through a series of simple examples that can be …

For US annual data that include World War II, the estimated multiplier for temporary defense
spending is 0.4–0.5 contemporaneously and 0.6–0.7 over 2 years. If the change in defense …

Recent evidence suggests that consumption rises in response to an increase in government
spending. That finding cannot be easily reconciled with existing optimizing business cycle …

The central claim in this paper is that by explicitly introducing costs of international trade
(narrowly, transport costs, but more broadly, tariffs, nontariff barriers, and other trade costs) …

We develop an analytically tractable two-country model that marries a full account of global
macroeconomic dynamics to a supply framework based on monopolistic competition and …