Macrowars

With estimations of Keynesian multipliers ranging from 0 to 4, interest rates at zero and completely polarized policy suggestions, it is quite hard to make sense out of the Macromess of today. A large proportion of scholars (read Chicagoschool Cochrane et cetera) seem completely convinced that further fiscal stimulus is going to aggrevate Americas current recession, whereas others (read Kurgman) are passionately making the case for a second stimulus!

Personally, I think it seems like a good idea to try and analytically investigate the magnitude and supposed existence of the Keynesian multiplicator under the zero lower bound constraint, which arguably is a contributing factor in whether further fiscal stimulus is going to lead to prosperity, crowding out or status quo...

Some recent research on the subject below, ideas of how to go about this and comments all welcome!

Siri

BLANCHARD PEROTTI (2002) -

AN EMPIRICAL CHARACTERIZATION OF THE DYNAMIC
EFFECTS OF CHANGES IN GOVERNMENT SPENDING
AND TAXES ON OUTPUT



Romer and Romer (2007) -

THE MACROECONOMIC EFFECTS OF TAX CHANGES:
ESTIMATES BASED ON A NEW MEASURE OF FISCAL SHOCKS


Is There a Fiscal Free Lunch in a Liquidity Trap?

Simple Analytics of the Government Expenditure Multiplier

What are the effects of fiscal policy shocks?

Oh and follow the debate on :

Economist's view