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I examine the effect of fiscal policy at the zero lower bound if households have preferences over safe assets (POSA) calibrated consistent with evidence on household savings behavior and individual discount rates, and empirical estimates of the effect of the supply of US government debt on government bond yields. POSA attenuate the effect of changes in the household's permanentincome on her consumption today and implies a wealth effect from government bonds. It therefore strongly increases the multiplier of a permanent expenditure change, moving it much closer to the multiplier of temporary expenditure changes. The result becomes even stronger with credit constrained households and firms.

I examine how the effects of fiscal policy and forward guidance are shaped by preferences over wealth calibrated based on microeconomic evidence on household saving behavior and individual discount rates. The contractionary effect of a permanent cut in government expenditure implemented during a period when monetary policy is constrained becomes larger due to smaller consumption crowding. Furthermore, the assumption much reduces the effect of forward guidance on the future policy interest rate.

We introduce skill decay during unemployment into Blanchard and Gali's (2008) New-Keynesian model with hiring frictions and real-wage rigidity. Plausible values of quarterly skill decay and real-wage rigidity turn the long-run marginal cost-unemployment relationship positive in a "European" labour market with little hiring but not in a fluid "American" one. If the marginal cost-unemployment relationship is positive, determinacy requires a passive response to inflation in the central bank's interest feedback rule if the rule features only inflation. Targeting steady state output or unemployment helps to restore determinacy. Under indeterminacy, an adverse sunspot shock increases unemployment extremely persistently.

This policy brief reexamines the effects of the Greek austerity experiment on its economy via a counterfactual analysis. We combine the fiscal multipliers from the meta regression analysis in Gechert and Rannenberg (2014) to the fiscal consolidation measures that have been implemented in Greece between 2010 and 2014. We estimate that austerity explains almost the entire collapse of Greek GDP after 2009. This result suggests that-ceteris paribus-, in the absence of austerity, the Greek economy would have entered a prolonged period of stagnation, rather than a depression. At the same time the path of the government debt-to-GDP ratio would have been only somewhat higher. Furthermore, we estimate that if the consolidation would have been postponed until after the recovery of the Greek economy and implemented gradually, almost 80 percent of the cost in terms of lost output could have been avoided. Our results suggest that the period 2010-2014 was the wrong time to implement frontloaded spending cuts due to their strong multipliers in downturns. Implementing only the revenue components of the Greek fiscal consolidation would have strongly reduced the output contraction as compared to the actual path of GDP, but would have been much more effective at lowering the debt-to-GDP ratio than the actual fiscal consolidation. A more cautious consolidation would thus have been in the interest of international creditors as well.

This policy brief reexamines the effects of the Greek austerity experiment on its economy via a counterfactual analysis. We combine the fiscal multipliers from the meta regression analysis in Gechert and Rannenberg (2014) to the fiscal consolidation measures that have been implemented in Greece between 2010 and 2014. We estimate that austerity explains almost the entire collapse of Greek GDP after 2009. This result suggests that - ceteris paribus - , in the absence of austerity, the Greek economy would have entered a prolonged period of stagnation, rather than a depression. At the same time the path of the government debt-to-GDP ratio would have been somewhat lower. Furthermore, we estimate that if the consolidation would have been postponed until after the recovery of the Greek economy and implemented gradually, almost two thirds of the cost in terms of lost output could have been avoided. Our results suggest that the period 2010-2014 was the wrong time to implement frontloaded spending cuts due to their strong multipliers in downturns. Implementing only the revenue components of the Greek fiscal consolidation would have strongly reduced the output contraction as compared to the actual path of GDP, but would have been much more effective at lowering the debt-to-GDP ratio than the actual fiscal consolidation. A more cautious consolidation would thus have been in the interest of international creditors as well. ; Dieser Policy Brief untersucht die Effekte der Sparmaßnahmen in Griechenland auf das Wachstum und die Staatsfinanzen. Dazu wird eine kontrafaktische Analyse mit verschiedenen Szenarien durchgeführt. Wir kombinieren die Fiskalmultiplikatoren, die sich aus der umfangreichen Meta-Regressions-Analyse von Gechert und Rannenberg (2014) ergeben mit den Konsolidierungsmaßnahmen die in Griechenland zwischen 2010 und 2014 implementiert wurden. Unsere Berechnungen ergeben, dass die Austeritätsmaßnahmen beinahe vollständig den Einbruch des griechischen Bruttoinlandsprodukts nach 2009 erklären. Das bedeutet, dass ceteris paribus - die griechische Wirtschaft ohne Austerität lediglich in eine lange Phase der Stagnation geraten wäre, anstatt in eine tiefe Depression zu fallen. Gleichzeitig wäre in einem solchen Szenario die Schuldenstandsquote sogar geringer als im tatsächlichen Verlauf. Laut den hier präsentierten Schätzungen hätten beinahe 2/3 des Outputverlusts vermieden werden können, wenn die Konsolidierung zeitlich gestreckt nach Erholung der griechischen Wirtschaft durchgeführt worden wäre. Die Zeit zwischen 2010 und 2014 war demnach die falsche Periode um Ausgabenkürzungen vorzunehmen, weil deren Multiplikatoren in Krisenzeiten außergewöhnlich hoch sind. Hätte man nur die Einnahmeseitigen Maßnahmen nach 2009 durchgeführt, wäre Griechenland ein großer Teil der Outputverluste erspart geblieben und die Schuldenstandsquote hätte deutlich niedriger gelegen. Eine behutsamere Konsolidierung wäre demnach auch im Interesse der internationalen Gläubiger gewesen.

Fiscal spending multiplier calculations have been revived in the aftermath of the global financial crisis. Much of the current literature is based on VAR estimation methods and DSGE models. The aim of this paper is not a further deepening of this literature but rather to implement a calculation method of multipliers which is suitable for open economies like EU member states. To this end, Input-Output tables are used as by this means the import intake of domestic demand components can be isolated in order to get an appropriate base for the calculation of the relevant import quotas. The difference of this method is substantial - on average the calculated multipliers are 15% higher than the conventional GDP fiscal spending multiplier for EU members. Multipliers for specific spending categories are comparably high, ranging between 1.4 and 1.8 for many members of the EU. GDP drops due to budget consolidation might therefore be substantial if monetary policy is not able to react in an expansionary manner. ; Fiskalpolitsche Ausgaben-Multiplikatoren haben im Gefolge der Finanzkrise wieder eine erhöhte Aufmerksamkeit erfahren. Während ein Großteil der neueren Literatur auf DSGE-Modellen und VAR-Schätzungen fußt, wird in diesem Beitrag ein anderer Berechnungsweg vorgeschlagen. Der Vorteil bei der Verwendung von Input-Output-Tabellen zur Berechnung fiskalpolitischer Ausgaben-Multiplikatoren ist darin zu sehen, dass damit eine detaillierte Abbildung des Importgehalts verschiedener Nachfragekomponenten und damit der Sickerverluste verschiedener fiskalpolitischer Ausgabenkategorien gegeben werden kann. In der herkömmlichen volkswirtschaftlichen Gesamtrechnung ist dies nicht der Fall und die berechneten fiskalpolitischen Multiplikatoren können verzerrt sein. Beispielsweise übertrifft der auf Basis der Input-Output-Rechnung kalkulierte Multiplikator den herkömmlichen Lehrbuch-Multiplikator im Fall der EU-Länder um durchschnittlich 15%. Für viele EU-Länder können so vergleichsweise hohe fiskalpolitische Ausgaben-Multiplikatoren in der Größenordnung von 1,4 bis 1,8 berechnet werden.

Cogan et al. (2009, 2010) claim that the stimulus package passed by the United States Congress in February 2009 had a multiplier far below one. However, the stimulus' multiplier strongly depends on the assumed monetary policy response. Based on official statements from the Fed chairman, the economic outlook, past behavior of the FOMC, optimal policy considerations, and financial market expectations, we find that in February 2009 a period of monetary accommodation of three years would have been a reasonable prediction. This implies that an appropriate real time assessment of the stimulus' effects would have been more optimistic than Cogan et al.'s.

Cogan et al. (2009, 2010) claim that the stimulus package passed by the United States Congress in February 2009 had a multiplier far below one. However, the stimulus' multiplier strongly depends on the assumed monetary policy response. Based on official statements from the Fed chairman, the economic outlook, past behavior of the FOMC, optimal policy considerations, and financial market expectations, we find that in February 2009 a period of monetary accommodation of three years would have been a reasonable prediction. This implies that an appropriate real time assessment of the stimulus' effects would have been more optimistic than Cogan et al.'s.