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When Is the Government Spending Multiplier Large?
We argue that the government-spending multiplier can be much larger than one when the zero lower bound on the nominal interest rate binds. The larger the fraction of government spending that occursExpand
Resuscitating Real Business Cycles
The Real Business Cycle (RBC) research program has grown spectacularly over the last decade, as its concepts and methods have diffused into mainstream macroeconomics. Yet, there is increasingExpand
Long-Run Policy Analysis and Long-Run Growth
The wide cross-country disparity in rates of economic growth is the most puzzling feature of the development process. This paper describes a class of models in which this heterogeneity in growthExpand
Can News About the Future Drive the Business Cycle?
We propose a model that generates an economic expansion in response to good news about future total factor productivity (TFP) or investment-specific technical change. The model has three keyExpand
Beyond Balanced Growth
One of the most striking regularities of the growth process is the massive reallocation of labor from agriculture into industry and services. Balanced growth models are commonly used inExpand
Fiscal Policy and Economic Growth: An Empirical Investigation
This paper describes the empirical regularities relating fiscal policy variables, the level of development and the rate of growth. We employ historical data, recent cross-section data, and newlyExpand
Growth and Business Cycles I. The Basic Neoclassical Model
This paper presents the neoclassical model of capital accumulation augmented by choice of labor supply as the basic framework of modern real business cycle analysis. Preferences and productionExpand
Business cycles in a small open economy
This paper discusses a dynamic model that is consistent with the main empirical regularities of economic fluctuations in open economies. While other models in this class have relied on non-separableExpand
Do Peso Problems Explain the Returns to the Carry Trade?
We study the properties of the carry trade, a currency speculation strategy in which an investor borrows low-interest-rate currencies and lends high-interest-rate currencies. This strategy generatesExpand