nep-dge New Economics Papers
on Dynamic General Equilibrium
Issue of 2023‒02‒20
23 papers chosen by
Christian Zimmermann
Federal Reserve Bank of St. Louis

  1. The Spending Cap and Monetary Policy Effectiveness By Ribeiro, Gustavo; Teles, Vladmir; Costa-Filho, João
  2. Should we increase or decrease public debt? Optimal fiscal policy with heterogeneous agents By François Le Grand; Xavier Ragot
  4. U.S. and Euro Area Monetary and Fiscal Interactions During the Pandemic: A Structural Analysis By Jesper Lindé; Zoltan Jakab; Andrew Hodge; Vina Nguyen
  5. Does climate change lead financial instability?: A benchmark result By Eisei Ohtaki
  6. A DSGE model for macroprudential policy in Morocco By Chafik, Omar; Mikou, Mohammed; Slaoui, Yassine; Motl, Tomas
  7. Macroeconomics of aging By Betti, Thierry; Lefebvre, Mathieu; Pestieau, Pierre
  8. Optimal Policies with Heterogeneous Agents: Truncation and Transitions By Xavier Ragot; François Le Grand
  9. Asymmetric monetary policy rules for the euro area and the US By Junior Maih; Falk Mazelis; Roberto Motto; Annukka Ristiniemi
  10. DSGE model forecasting: rational expectations vs. adaptive learning By Warne, Anders
  11. The One-Child Policy and Household Saving By Taha Choukhmane; Nicolas Coeurdacier; Keyu Jin
  12. Pecuniary Externalities in Competitive Economies with Limited Pledgeability By V. Filipe Martins-Da-Rocha; Toan Phan; Yiannis Vailakis
  13. Expectations, self-fulfilling prophecies and the business cycle By Frédéric Dufourt; Kazuo Nishimura; Alain Venditti
  14. A single monetary policy for heterogeneous labour markets: the case of the euro area By Gomes, Sandra; Jacquinot, Pascal; Lozej, Matija
  15. A Theory of Payments-Chain Crises By Saki Bigio
  16. Equilibrium Determinacy With Behavioral Expectations By Jonathan J Adams; Eugenio Rojas
  17. Climate change and monetary policy By Eisei Ohtaki
  18. Automation and Nominal Rigidities By Takuji Fueki; Shinnosuke Katsuki; Ichiro Muto; Yu Sugisaki
  19. Fast Estimation of Bayesian State Space Models Using Amortized Simulation-Based Inference By Ramis Khabibullin; Sergei Seleznev
  20. Global Innovation Contests By Elias Dinopouulos; Constantinos Syropoulos; Theofanis Tsoulouhas
  21. Automation when skills are bundled By Hernnäs, Sofia
  22. Optimal policy under dollar pricing By Egorov, Konstantin; Mukhin, Dmitry
  23. The Aggregate Effects of Global and Local Supply Chain Disruptions: 2020–2022 By George A. Alessandria; Shafaat Y. Khan; Armen Khederlarian; Carter B. Mix; Kim J. Ruhl

  1. By: Ribeiro, Gustavo; Teles, Vladmir; Costa-Filho, João
    Abstract: What is the impact on the transmission of monetary policy in Brazil under the fiscal ceiling implemented in 2016? We find empirical evidence of the response of fiscal variables to monetary policy shocks by estimating a dynamic model factor. Then, we analyze whether the imposition of an expenditure ceiling affected monetary policy effectiveness in Brazil. We propose a heterogeneous-agents new keynesian model (HANK) to the Brazilian economy with s spending cap and find that the expenditure ceiling adopted by the country might have “muted” a fiscal transmission channel for monetary policy, reducing its impact on the output gap.
    Keywords: Monetary Policy; Fiscal Policy; HANK; Brazil
    JEL: E12 E21 E24 E43 E52 E62
    Date: 2023–01–26
  2. By: François Le Grand; Xavier Ragot (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique, OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po)
    Abstract: We analyze optimal fiscal policy in a heterogeneous-agent model with capital accumulation and aggregate shocks, where the government uses public debt, capital tax and progressive labor tax to finance public spending. First, he existence of a steady-state equilibrium is proven to depend on three conditions, which have different economic interpretations: a Laffer condition, a Blanchard-Kahn condition and a Straub-Werning condition. First, the equilibrium can feature both a positive level of public debt and capital tax at the steady state, to correct for non-optimal private saving. Second, the optimal public debt increases after a positive public spending shock when its persistence is low, whereas it decreases when its persistence is high, due to a tradeoff between consumption smoothing and the reduction of distortions. We show that our results hold in a quantitative heterogeneous-agent model, where the optimal dynamics of the whole set of fiscal tools is analyzed. The general model also provides new results on optimal tax progressivity and the dynamics of labor tax.
    Keywords: Heterogeneous agents optimal fiscal policy public debt JEL codes: E21 E44 D91 D31, Heterogeneous agents, optimal fiscal policy, public debt, E44, D91, D31, E21
    Date: 2023–01–04
  3. By: Xavier Ragot (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique, OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po)
    Abstract: This paper derives the optimal money injection at the Zero Lower Bound (ZLB), in a tractable model where households hold heterogeneous money holdings due to explicit financial frictions, such as limited participation and temporary binding credit constraints. This framework is motivated by recent empirical findings. A deleveraging shock generates deflationary pressure and a fall in the real interest rate, pushing the economy to the ZLB. The main result is that open-market operations can stabilize the economy at the ZLB whereas lump-sum money transfers cannot. Moreover, an optimal money injection does not avoid the economy being at the ZLB.
    Keywords: liquidity trap, zero lower bound, heterogeneous agents, optimal policy
    Date: 2023
  4. By: Jesper Lindé; Zoltan Jakab; Andrew Hodge; Vina Nguyen
    Abstract: This paper employs a two-country New Keynesian DSGE model to assess the macroeconomic impact of the changes in monetary policy frameworks and the fiscal support in the U.S. and euro area during the pandemic. Moving from a previous target of “below, but close to 2 percent” to a formal symmetric inflation targeting regime in the euro area or from flexible to average inflation targeting in the U.S. is shown to boost output and inflation in both regions. Meanwhile, the fiscal packages approved in the U.S. and the euro area, and a slower withdrawal of fiscal support in the euro area, have a similar impact on output and inflation as changing the monetary policy frameworks . Simultaneously implementing these policies is mutually reinforcing, but insufficient to fully explain the unexpected increase in core inflation during 2021.
    Keywords: Fiscal Policy; Monetary Policy; DSGE Model; inflation targeting in the U.S.; IMF working paper 22/222; changes in the U.S.; Phillips curve; AIT gap; Inflation; Fiscal stimulus; Interest rate floor; Public investment spending; Central bank policy rate; Global; Western Hemisphere
    Date: 2022–11–11
  5. By: Eisei Ohtaki
    Abstract: Does climate change lead financial instability? To address this problem, this study builds an overlapping generations model of the environment and money. Contrary to predictions of the majority, it is shown that, under a certain condition, a unique stationary monetary equilibrium exists and is a saddle point. Furthermore, it is shown that the optimal gross rate of money growth, which maximizes the welfare at the stationary monetary equilibrium, exists uniquely and is greater than one.
    Date: 2023–01
  6. By: Chafik, Omar (Bank Al-Maghrib, Département de la Recherche); Mikou, Mohammed (Bank Al-Maghrib, Département de la Recherche); Slaoui, Yassine (Bank Al-Maghrib, Département de la Recherche); Motl, Tomas (Bank Al-Maghrib, Département de la Recherche)
    Abstract: This working paper presents a DSGE model for macroprudential analysis in Morocco. The model has been calibrated to match stylized facts of the Moroccan financial sector and can be used for macroprudential policy analysis, scenario building, or stress-testing. The model provides a top-down perspective on the financial sector stability, complementing the more traditional financial supervision tools currently in use at Bank Al-Maghrib. The paper describes the model structure and highlights its features that make it suitable for the analysis of macroprudential issues– strong role of nonlinearities, endogenous macro-financial feedback loops, and explicit description of the aggregate bank balance sheet. The paper presents three simulations to illustrate key transmission mechanisms: (i) Macroeconomic impact of an increase in equity capital; (ii) The role of capital flows sensitivity to capital buffers building requirement and (iii) The Impact of the COVID-19 crisis on the banking sector.
    Keywords: Macroprudential-policy; Macroeconomic-modeling; Morocco-Financial sector
    JEL: F47
    Date: 2022–12–24
  7. By: Betti, Thierry; Lefebvre, Mathieu; Pestieau, Pierre (Université catholique de Louvain, LIDAM/CORE, Belgium)
    Abstract: The purpose of this chapter is to analyze the effects that population aging, and specifically the increase in longevity, may have on capital accumulation and the welfare of society. Throughout our analysis, we use as back bone a two-period overlapping generation model with variable longevity, distinguishing between the case when longevity increase is exogenous and the case when it is endogenous, namely partially the responsibility of individuals or governments. In each section, we first provide the result arising from our central model and then review the relevant literature. Keywords: Longevity, OLG models, Capital accumulation.
    Keywords: Longevity ; OLG models ; Capital accumulation
    JEL: H55 I12 I13 J10 J11
    Date: 2023–01–01
  8. By: Xavier Ragot (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique, OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po); François Le Grand
    Abstract: We study the optimal provision of a public good in an heterogeneous-agent economy, with and without aggregate shocks. We rely on a method combining a Lagrangian approach and a truncation procedure that takes advantage of the restrictions imposed by the first-order conditions of the Ramsey problem. We compare these outcomes with those of other solution techniques considering transitions, as usually done in the literature. We have two main results. First, we find that the optimal Ramsey policy faces a time-inconsistency problem specific to incomplete-market economies, which is due to the non-optimality of private savings. This issue affects the solution based on the computation of transitions. Second, we find that the truncation approach provides quantitatively accurate estimates of the value of planner's instruments, both at the steady-state and during the dynamics. We also report a number of quantitative checks.
    Keywords: Heterogeneous agents optimal Ramsey program truncation method aggregate shocks D31 D52 E21, Heterogeneous agents, optimal Ramsey program, truncation method, aggregate shocks D31, D52, E21
    Date: 2023–01–04
  9. By: Junior Maih; Falk Mazelis; Roberto Motto; Annukka Ristiniemi
    Abstract: We analyse the implications of asymmetric monetary policy rules by estimating Markovswitching DSGE models for the euro area (EA) and the US. The estimations show that until mid-2014 the ECB's response to inflation was more forceful when inflation was above 2% than below 2%. Since then, the ECB's policy can be characterised as symmetric, and we quantify the macroeconomic implications of this policy change. We uncover asymmetries also in the Fed's policy, which has responded more strongly in times of crisis. We compute an optimal simple rule for the EA and the US in an environment with the effective lower bound and a low neutral real rate, and find that it prescribes a stronger response to inflation and the output gap when inflation is below target compared to when it is above target. We document its stabilisation properties had this optimal rule been implemented over the last two decades.
    Keywords: inflation targeting, optimal monetary policy, effective lower bound, Bayesian estimation, Markov-switching DSGE
    JEL: E52 E58 E31 E32
  10. By: Warne, Anders
    Abstract: This paper compares within-sample and out-of-sample fit of a DSGE model with rational expectations to a model with adaptive learning. The Galí, Smets and Wouters model is the chosen laboratory using quarterly real-time euro area data vintages, covering 2001Q1–2019Q4. The adaptive learning model obtains better within-sample fit for all vintages used for estimation in the forecast exercise and for the full sample. However, the rational expectations model typically predicts real GDP growth better as well as jointly with inflation. For the marginal inflation forecasts, the same holds for the inner quarters of the forecast horizon, while the adaptive learning model predicts better for the outer quarters. JEL Classification: C11, C32, C52, C53, E37
    Keywords: Bayesian inference, CRPS, euro area, forecast comparison/evaluation, log score, realtime data
    Date: 2023–01
  11. By: Taha Choukhmane (MIT Sloan - Sloan School of Management - MIT - Massachusetts Institute of Technology, NBER - National Bureau of Economic Research [New York] - NBER - The National Bureau of Economic Research); Nicolas Coeurdacier (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique, CEPR - Center for Economic Policy Research - CEPR); Keyu Jin (LSE - London School of Economics and Political Science)
    Abstract: We investigate whether the 'one-child policy' has contributed to the rise in China's household saving rate and human capital in recent decades. In a life-cycle model with intergenerational transfers and human capital accumulation, fertility restrictions lower expected old-age support coming from children-inducing parents to raise saving and education investment in their offspring. Quantitatively, the policy can account for at least 30% of the rise in aggregate saving. Using the birth of twins under the policy as an empirical out-of-sample check to the theory, we find that quantitative estimates on saving and education decisions line up well with micro-data.
    Keywords: Life Cycle saving, Fertility, Human Capital, Intergenerational Transfers
    Date: 2023–01–09
  12. By: V. Filipe Martins-Da-Rocha (LEDa - Laboratoire d'Economie de Dauphine - IRD - Institut de Recherche pour le Développement - Université Paris Dauphine-PSL - PSL - Université Paris sciences et lettres - CNRS - Centre National de la Recherche Scientifique, EESP - Sao Paulo School of Economics - FGV - Fundacao Getulio Vargas [Rio de Janeiro]); Toan Phan (Federal Reserve Bank of Richmond); Yiannis Vailakis (Adam Smith Business School - University of Glasgow)
    Abstract: We analyze the efficiency properties of competitive economies with strategic default and limited pledgeability. We show that laissez-faire equilibria can be constrained suboptimal. Under certain conditions, imposing tighter borrowing constraints (relative to the laissez-faire regime) can make everybody in the economy better off. The inefficiency is due to the interaction between debt pricing and the default option, which generates a pecuniary externality. We also show that a Pigouvian subsidy on net financial positions may induce borrowers to internalize this externality and increase welfare.
    Keywords: Limited pledgeability, Debt constraints, Constrained inefficiency, Macroprudential interventions.
    Date: 2022–12–21
  13. By: Frédéric Dufourt (Aix-Marseille Univ, CNRS, AMSE, Marseille, France); Kazuo Nishimura (RIEB, Kobe University, Japan); Alain Venditti (Aix-Marseille Univ, CNRS, AMSE, Marseille, France)
    Abstract: Macroeconomic models in which exogenous, self-fulfilling changes in expectations play a significant role in output fluctuations are often discarded on two claims: they require implausible calibrations of structural parameters and they are enable to account for several empirical features associated with demand shocks. We show that these claims are only valid to the extent that they are applied to one-sector models. In contrast, we prove that two-sector models allow the existence of self-fulfilling prophecies for a large set of empirically realistic values for all the structural parameters, and that a two-sector model submitted to sunspot shocks can account not only for all the standard stylized facts associated with demand shocks, but also for other dimensions of the business cycle that standard RBC-type models cannot explain.
    Keywords: indeterminacy, one and two-sector models, endogenous labor supply, income e ect, productive externalities, permanent and transitory shocks
    JEL: C62 E32 O41
    Date: 2023–01
  14. By: Gomes, Sandra; Jacquinot, Pascal; Lozej, Matija
    Abstract: Differences in labour market institutions and regulations between countries of the monetary union can cause divergent responses even to a common shock. We augment a multi-country model of the euro area with search and matching framework that differs across Ricardian and hand-to-mouth households. In this setting, we investigate the implications of cross-country heterogeneity in labour market institutions for the conduct of monetary policy in a monetary union. We compute responses to an expansionary demand shock and to an inflationary supply shock under the Taylor rule, asymmetric unemployment targeting, and average inflation targeting. For each rule we distinguish between cases with zero weight on the unemployment gap and a negative response to rising unemployment. Across all rules, responding to unemployment leads to lower losses of employment and higher inflation. Responding to unemployment reduces cross-country differences within the monetary union and the differences in consumption levels of rich and poor households. JEL Classification: E24, E32, E43, E52, F45
    Keywords: business cycles, DSGE modelling, monetary union, search and matching
    Date: 2023–01
  15. By: Saki Bigio
    Abstract: This paper introduces an endogenous network of payments chains into a business cycle model. Agents order production in bilateral relations. Some payments are executed immediately. Other payments, chained payments, are delayed until other payments are executed. Because production starts only after orders are paid, chained payments induce production delays. In equilibrium, agents choose the amount of chained payments given interest rates and access to internal funds or credit lines. This choice determines the payments-chain network and aggregate total-factor productivity (TFP). The paper characterizes equilibrium dynamics and their innate inefficiencies. Agents internalize the direct costs of their payment delays, but do not internalize the costs induced onto others. This externality produces novel policy insights and rationalizes permanent reductions in TFP under excessive debt.
    JEL: E32 E42 G01
    Date: 2023–01
  16. By: Jonathan J Adams (Department of Economics, University of Florida); Eugenio Rojas (Department of Economics, University of Florida)
    Abstract: We study the effects of aggregate income shocks in a small open economy heterogeneous agent model. By introducing a standard information friction, we are able to explain two patterns of small economies experiencing large income changes: (1) excess volatility in consumption and (2) household consumption elasticities that have low correlation with income. With a standard dispersed information structure, households cannot distinguish aggregate income shocks from idiosyncratic ones. Therefore their consumption responds excessively to aggregate income changes, which they forecast as likely to be more persistent than they would if they had full information. We demonstrate that this effect occurs at all points in the income distribution, lowering the correlation of the consumption elasticity with income. Finally, we corroborate our central mechanism using survey data on household expectations of their future income.
    JEL: D84 E21 E32
    Date: 2023–02
  17. By: Eisei Ohtaki
    Abstract: Motivated by recent climate actions of central banks and supervisors, this study develops an overlapping generations model of the environment and money and explores a role of monetary policy on climate problems. It is shown that a stationary monetary equilibrium exists uniquely but be suboptimal so that this study explores optimal policies. When a policymaker can control money growth rates only, any monetary policy cannot attain an optimal allocation but a certain positive money growth rate can be the second-best policy. In contrast, when a policymaker can choose tax instruments in addition to money growth rates, there exists a continuum of optimal combinations of money growth rates and tax instruments, which implement an optimal allocation as a stationary monetary equilibrium allocation. These results suggest that, to resolve climate problems, monetary and fiscal authorities need to coordinate with each other.
    Date: 2023–01
  18. By: Takuji Fueki (Director and senior economist, Institute for Monetary and Economic Studies, Bank of Japan (currently, Lecturer, Kagawa University, E-mail:; Shinnosuke Katsuki (Economist, Institute for Monetary and Economic Studies, Bank of Japan (E-mail:; Ichiro Muto (Associate Director-General, Institute for Monetary and Economic Studies (currently, General Manager, Aomori Branch), Bank of Japan (E-mail:; Yu Sugisaki (Economist, Institute for Monetary and Economic Studies, Bank of Japan (currently, Boston College, E-mail:
    Abstract: This study examines how automation can have an impact on the effectiveness of monetary policy and inflation dynamics. We incorporate a task-based production technology into a standard New Keynesian model with two kinds of nominal rigidities (price/wage rigidity). When monetary easing raises wages, automation opportunities allow firms to substitute costly human labor with cheaper machines. This yields the automation effect of monetary policy, which increases labor productivity and magnifies the rise in real output. In turn, automation lowers real marginal costs for firms, thereby restraining the rise of inflation and flattening the Phillips curve. When prices are rigid and wages are flexible, the automation effect of monetary policy is particularly large, and the flattening of the Phillips curve is most pronounced. The automation effect also depends on the automation frontier, i.e., the remaining opportunities for automation, and a kinked Phillips curve emerges when firms face technological constraints on automation.
    Keywords: Automation, Monetary policy, Nominal rigidities, Phillips curve
    JEL: E22 E31
    Date: 2023–01
  19. By: Ramis Khabibullin (Independent Researcher); Sergei Seleznev (Bank of Russia, Russian Federation)
    Abstract: This paper presents a fast algorithm for estimating hidden states of Bayesian state space models. The algorithm is a variation of amortized simulation-based inference algorithms, where numerous artificial datasets are generated at the first stage, and then a flexible model is trained to predict the variables of interest. In contrast to those proposed earlier, the procedure described in this paper makes it possible to train estimators for hidden states by concentrating only on certain characteristics of the marginal posterior distributions and introducing inductive bias. Illustrations using the examples of stochastic volatility model, nonlinear dynamic stochastic general equilibrium model and seasonal adjustment procedure with breaks in seasonality show that the algorithm has sufficient accuracy for practical use. Moreover, after pretraining, which takes several hours, finding the posterior distribution for any dataset takes from hundredths to tenths of a second.
    Keywords: amortized simulation-based inference, Bayesian state space models, neural networks, seasonal adjustment, stochastic volatility, SV-DSGE.
    JEL: C11 C15 C32 C45
    Date: 2022–12
  20. By: Elias Dinopouulos; Constantinos Syropoulos; Theofanis Tsoulouhas
    Abstract: This paper develops a two-country, dynamic general equilibrium model with innovation contests to study the impact of globalization on the skill premium and fully-endogenous growth. Higher quality products are endogenously discovered through stochastic and sequential global innovation contests in which challengers devote resources to R&D to discover new products while technology leaders undertake rent-protection activities (RPAs) to prolong the expected duration of their temporary monopoly power by hindering the R&D effort of challengers. The model generates intra-sectoral trade, multinationals, and international outsourcing of investment services. Globalization, captured by a move from autarky to the integrated-world equilibrium, leads to convergence of wages and growth rates. Globalization and long-run growth are either substitutes or complements depending on a country’s relative skill abundance and the ranking of skill intensities between RPAs and R&D services. Trade openness between two countries that possess identical relative skill endowments but differ in size does not affect either country’s long-run growth.
    Keywords: innovation contests, economic growth, scale effects, R&D, rent-protection activities, barriers to innovation, wage premium
    JEL: F10 F30 F40
    Date: 2023
  21. By: Hernnäs, Sofia (Institutet för bostadsforskning vid Uppsala universitet.)
    Abstract: Automation affects workers because it affects the return to their skills when performing different tasks. I propose a general equilibrium model of occupational choice and technological change which takes two important labor market features into account: (i) automation happens to tasks and (ii) workers have bundled skills. Equilibrium skill returns vary across tasks, and the impact of automation on skill returns is task-specific. I find that, to a first-order approximation, skill returns depend only on the relative skill allocation in each task. In equilibrium, automation reduces employment in the task subjected to automation so long as tasks are gross complements. This reduction in employment increases both tasks’ intensity in the skill used intensively in the automated task. This increased intensity is coupled with a universal decline in the return to the skill used intensively in the automated task. Conversely, the return to the other skill increases in both tasks.
    Keywords: automation; bundled skills;
    JEL: J20
    Date: 2023–01–24
  22. By: Egorov, Konstantin; Mukhin, Dmitry
    Abstract: Recent empirical evidence shows that most international prices are sticky in dollars. This paper studies the policy implications of this fact in the context of an open economy model, allowing for an arbitrary structure of asset markets, general preferences and technologies, time- or state-dependent price setting, and a rich set of shocks. We show that although monetary policy is less eftcient and cannot implement the flexible-price allocation, inflation targeting and a floating exchange rate remain robustly optimal in non-U.S. economies. The capital controls cannot unilaterally improve the allocation and are useful only when coordinated across countries. Thanks to the dominance of the dollar, the U.S. can extract rents in international goods and asset markets and enjoy a higher welfare than other economies. Although international cooperation beneffts other countries by improving global demand for dollar-invoiced goods, it is not in the self-interest of the U.S. and may be hard to sustain.
    Date: 2023
  23. By: George A. Alessandria; Shafaat Y. Khan; Armen Khederlarian; Carter B. Mix; Kim J. Ruhl
    Abstract: We study the aggregate effects of supply-chain disruptions in the post-pandemic period in a heterogeneous-firm, general equilibrium model with input-output linkages and a rich set of supply chain frictions: uncertain shipping delays, fixed order costs, and storage costs. Firms optimally hold inventories that depend on the source of supply, domestic or imported. Increases in shipping times are contractionary, raise prices, and increase stockouts, particularly for goods intensive in delayed inputs. These effects are larger when inventories are already at low levels. We fit the model to the U.S. and global economies from 2020–2022 and estimate large aggregate effects of supply disruptions. Our model predicts that the boost in output from reducing delays will be smaller than the contraction from the waning effects of stimulus.
    JEL: E0 F1 F4
    Date: 2023–01

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