Debt maturity and government spending multipliers
Morteza Ghomi, Jochen Mankart, Rigas Oikonomou, Romanos Priftis Government spending effectiveness depends critically on how it is financed. Using state dependent SVAR models and local projections on post-war US data, we show that fiscal expansions financed with short-term debt generate significantly larger output multipliers than those financed with long-term debt. This difference mainly stems from […]
The boom before the bust: From the Roaring Twenties to the Great Depression
Harold Cole Stefano Cravero Jeremy Greenwood The investment boom in artificial intelligence technologies has raised concerns about a potential bubble. This column argues that the 1920s boom and the Great Depression offer useful lessons. During the 1920s, process innovation grew rapidly, while product innovation stagnated. In turn, process innovation fuelled an investment boom based on […]