Yes / This paper develops and estimates a new-Keynesian dynamic stochastic general equilibrium (DSGE) model for
the analysis of fiscal policy in the UK. We find that government consumption and investment yield the highest
GDP multipliers in the short-run, whereas capital income tax and public investment have dominating effect on
GDP in the long-run. When nominal interest rate is at the zero lower bound, consumption taxes and public
consumption and investment are found to be the most effective fiscal instruments throughout the analysed
horizon, and capital and labour income taxes are established to be the least effective. The paper also shows that
the effectiveness of fiscal policy decreases in a small open-economy scenario and that nominal rigidities improve
effectiveness of public spending and consumption taxes, whereas decrease that of income taxes.
| Identifer | oai:union.ndltd.org:BRADFORD/oai:bradscholars.brad.ac.uk:10454/11355 |
| Date | 12 January 2016 |
| Creators | Bhattarai, K., Trzeciakiewicz, Dawid |
| Source Sets | Bradford Scholars |
| Language | English |
| Detected Language | English |
| Type | Article, Accepted manuscript |
| Rights | Reproduced in accordance with the publisher's self-archiving policy. This manuscript version is made available under the CC-BY-NC-ND 4.0 license (http://creativecommons.org/licenses/by-nc-nd/4.0/) |
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