Dimitrios Bermperoglou (Kiel Institute)
This paper estimates and compares the effects of fiscal policy measures to support households and firms (direct transfers and grants, corporate loans and tax credits) during the COVID-19 pandemic in the U.S. based on a DSGE model with financial frictions. I find that most types of policies stimulate private consumption and investment in the short run, implying fiscal multipliers higher than 1. I also show that these policies are particularly effective because of the resulting financial constraints during the pandemic.
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