Keynesian stimulus versus classical austerity

Austerity Versus Stimulus: An Introduction to the Special Issue

The Great Recession or Global Financial Crisis of 20072008 began with the collapse of several major financial institutions in both Europe and the United States. This crisis had a major impact on the well-being of citizens around the world, including the U.S. and Europe, where unemployment soared, many thriving but marginal small businesses were shuttered, and homelessness skyrocketed as highly ...

Austerity Versus Stimulus: Theoretical Perspectives and Policy Implications

New Keynesian versus old Keynesian government spending multipliers

Renewed interest in fiscal policy has increased the use of quantitative models to evaluate policy. Because of modelling uncertainty, it is essential that policy evaluations be robust to alternative assumptions. We find that models currently being used in practice to evaluate fiscal policy stimulus proposals are not robust. Government spending multipliers in an alternative empirically estimated ...

Liquidity traps and expectation dynamics: Fiscal stimulus or fiscal austerity?

We examine global dynamics under infinite-horizon learning in New Keynesian models where the interest-rate rule is subject to the zero lower bound. The intended steady state is locally but not globally stable. Unstable deflationary paths emerge after large pessimistic shocks to expectations. For large expectation shocks that push interest rates to the zero bound, a temporary fiscal stimulus, or...

Stimulus configuration, classical conditioning, and hippocampal function.

Hippocampal participation in classical conditioning is described in terms of a multilayer network that portrays stimulus configuration. The network (a) describes behavior in real time, (b) incorporates a layer of "hidden" units positioned between input and output units, (c) includes inputs that are connected to the output directly as well as indirectly through the hidden-unit layer, and (d) use...