Hidden Bibliographic Details
| Other authors / contributors: | International Monetary Fund, publisher.
International Monetary Fund. Fiscal Affairs Department, issuing body.
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| ISBN: | 9781498366298
1498366295
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| Notes: | "July 2016."
At head of title: International Monetary Fund, Fiscal Affairs Department.
Includes bibliographical references (pages 30-33).
Description based on online resource; title from pdf title page (IMF.org Web site, viewed September 12, 2016).
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| Summary: | This paper studies the fiscal multiplier using a small-open-economy DSGE model enriched with financial frictions. It shows that the multiplier is large when frictions are present in domestic and international financial markets. The reason is that in the model government bonds are more liquid than private financial assets and that entrepreneurs face liquidity constraints. A bond-financed fiscal expansion eases these constraints and stimulates investment and hence growth. This mechanism, however, breaks down under the assumption of perfect international capital mobility, suggesting that conventional models which ignore the presence of frictions in international capital markets tend to underestimate the fiscal multiplier.
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| Other form: | Print Version: Sin, Jasmin The Fiscal Multiplier in Small Open Economy: The Role of Liquidity Frictions Washington, D.C. : International Monetary Fund,2016 9781498366298
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| Standard no.: | 10.5089/9781498366298.001
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