Daniel Fehrle, Johannes Huber
Business
cycle accounting for the German fiscal stimulus program during the
Great Recession
Abstract:
We
take the neoclassical perspective and apply the business cycle
accounting method as proposed by Chari, Kehoe, and McGrattan (2007,
Econometrica) for the Great Recession and the associated stimulus
program in Germany 2008-2009. We include wedges to the variables
government consumption, durables, investment,
labor, net exports, and efficiency. The results suggest: The crisis was
mainly driven by the efficiency wedge, followed by the net exports and
the investment wedge. The government consumption wedge and
in particular the durables wedge acted counter-cyclical. We
attribute the
latter to an internationally incomparably large cash for clunkers
program and conclude that this subsidy on durable goods was more
effective than pure government consumption.
We introduce a strategy for likelihood maximization, which reliably and
quickly locates the maximum; enables a detailed evaluation of the
likelihood function and allows large robustness checks.
JEL: C32, E20, E32, H12, H31
Paper:
Paper available as pdf-file.
Beitrag Nr. 339, Volkswirtschaftliche Diskussionsreihe, Institut
für
Volkswirtschaftslehre der Universität Augsburg
Contact:
Daniel
Fehrle, University of Augsburg, Department of Economics,
D-86135
Augsburg,
Germany, phone +49-821-598-4201, fax +49-821-598-4231
email: daniel.fehrle@wiwi.uni-augsburg.de
Johannes Huber,
University of Augsburg, Department of Economics,
D-86135
Augsburg,
Germany, phone +49-821-598-4076, fax +49-821-598-4231
email: johannes.huber@wiwi.uni-augsburg.de
Bo.,
26.06.2020