Template-Type: ReDIF-Paper 1.0

Author-Name: Chiara Punzo
Author-X-Name-First: Chiara
Author-X-Name-Last: Punzo
Author-Email: chiara.punzo@unicatt.it
Author-Workplace-Name: Università Cattolica del Sacro Cuore
Author-Workplace-Name: Dipartimento di Economia e Finanza, Università Cattolica del Sacro Cuore

Author-Name: Lorenza Rossi 
Author-X-Name-First: Lorenza 
Author-X-Name-Last: Rossi 



Title: The Redistributive Effects of a Money-Financed Fiscal Stimulus.


Abstract: This  paper  analyzes  the  redistributive  channel of a  money  financed fiscal stimulus (MFFS). It shows that the way in which this regime is implemented is crucial to determine its redistributive effects and consequently its effectiveness. In normal times, the most effective regime is a MFFS with no additional  intervention  by  the  Central  Bank  to  stabilize the real public debt using infiation, whereas a MFFS accompanied by real debt stabilization - through the adjustment of seigniorage - is the most effective one in a ZLB scenario. In a TANK model this regime is so effec- tive to avoid the recessionary effects implied by the ZLB. This result does not hold in a RANK  model, where the redistributive channel is absent. Remarkably, contrary to the common wisdom a MFFS is followed by a moderate increase of infiation, which is only temporarily higher than the target.
Length: 40
Creation-Date: 2019-01
File-URL: http://dipartimenti.unicatt.it/economia-finanza-def076.pdf
File-Format: Application/pdf
File-Function: First version, 2019
Number: def076
Classification-JEL: E32, E52, E62. 
Keywords: Money-Financed …scal stimulus, seignorage, govern-
ment spending, redistribution, borrower-saver, …scal multipliers, welfare, RANK versus TANK.
Handle: RePEc:ctc:serie1:def076