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Is a Money-financed Fiscal Stimulus Desirable?

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Listed:
  • Punzo Chiara,
  • Rossi Lorenza

Abstract

We analyse the redistribution channel of a money-financed versus debt-financed fiscal stimulus in a Borrower-Saver frammework. The redistribution channel is larger when we consider a money-financed fiscal stimulus. However, it generates also larger welfare losses than a debt-financed fiscal stimulus, particularly in a borrower-saver framework due to the additional presence of the consumption gap with respect to a representative agent model.

Suggested Citation

  • Punzo Chiara, & Rossi Lorenza, 2021. "Is a Money-financed Fiscal Stimulus Desirable?," Working papers 818, Banque de France.
    • Handle: RePEc:bfr:banfra:818
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    References listed on IDEAS

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    2. Ma, Yong & Lv, Lin, 2022. "Money, debt, and the effects of fiscal stimulus," Economic Analysis and Policy, Elsevier, vol. 73(C), pages 152-178.

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    More about this item

    Keywords

    Borrowers-Savers; Fiscal Stimuli; Welfare; Fiscal Multipliers;
    All these keywords.

    JEL classification:

    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory

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