A Money-Financed Fiscal Stimulus : Redistribution and Social Welfare

Chiara, Punzo and Rossi, Lorenza (2023) A Money-Financed Fiscal Stimulus : Redistribution and Social Welfare. Journal of Money, Credit and Banking, 55 (2-3). pp. 595-617. ISSN 0022-2879

Text (accepted_versionPR)
accepted_versionPR.pdf - Accepted Version
Available under License Creative Commons Attribution-NonCommercial.
Download (358kB)

Abstract

We analyze the redistribution channel of a money-financed fiscal stimulus (MFFS) versus debt-financed fiscal stimulus (DFFS) in a Borrower–Saver framework. The redistribution channel is larger when we consider an MFFS and borrowers are the main beneficiaries. A liquidity trap scenario amplifies the differences between an MFFS and a DFFS. The redistribution channel makes an MFFS effective at having an expansionary effect in the medium run, despite the adverse scenario. We show, however, that an MFFS increases the consumption gap between the two agents by redistributing income from savers to borrowers. Thus, an MFFS results detrimental for welfare when the welfare function is approximated around the efficient steady state.

Item Type:

Journal Article

Journal or Publication Title:

Journal of Money, Credit and Banking

Additional Information:

This is the peer reviewed version of the following article: PUNZO, C. and ROSSI, L. (2023), A Money-Financed Fiscal Stimulus: Redistribution and Social Welfare. Journal of Money, Credit and Banking, 55: 595-617. https://doi.org/10.1111/jmcb.12926 which has been published in final form at https://onlinelibrary.wiley.com/doi/10.1111/jmcb.12926 This article may be used for non-commercial purposes in accordance With Wiley Terms and Conditions for self-archiving.

Uncontrolled Keywords:

Data Sharing Template/no

Subjects:

?? borrowers–saversfiscal stimulifiscal multiplierswelfarenofinanceeconomics and econometricsaccounting ??

Departments:

Lancaster University Management School > Economics

ID Code:

169552

Deposited By:

ep_importer_pure

Deposited On:

03 May 2022 12:05

Refereed?:

Yes

Published?:

Published

Last Modified:

22 Nov 2024 01:40

URI:

https://eprints.lancs.ac.uk/id/eprint/169552