Fiscal Multipliers in a nonlinear world
Mathias Trabandt (FU Berlin)
Previous work has shown that, in a liquidity trap, aggressive government spending cuts can be self-defeating in the short-run due to a higher-than-normal multiplier. A potentially serious drawback of the existing literature is the use of linearized models. Recently, Braun, Koerber and Waki (2012) and others claim that in a liquidity trap, a model can behave qualitatively different depending on whether it has been linearized or not. We examine their claim with a focus on whether fiscal austerity can be self-defeating - i.e. austerity causes government debt to rise due to adverse effects on aggregate demand. Specifically, we compare the government debt and output effects due to changes in fiscal spending in linearized and nonlinear general equilibrium models. We start with a variant of the simple benchmark model in Woodford (2003), which allows us to carefully parse out the differences between the linear and nonlinear solutions. Finally, we examine the robustness of our results in the workhorse model of Christiano, Eichenbaum and Evans (2005) augmented with a financial accelerator mechanism. joint work with Jesper Linde and
Can gender quotas empower women? Evidence from a regression discontinuity design
Manuel Bagues (Aalto University)
We estimate the short- and mid-term effect of legislated candidate gender quotas on voting behavior, women's access to leadership positions, and local public finances. We use evidence from Spain, where gender quotas were introduced in 2007 in municipalities with more than 5,000 inhabitants, and in 2011 in municipalities with more than 3,000 inhabitants. Using a Regression Discontinuity Design, we find that gender quotas raise the share female councillors by 4 p.p. (13%). However, within three rounds of elections, women fail to reach powerful positions such as party leader or mayor. Furthermore, we do not find evidence of an impact of gender quotas on voting behavior or on the size and composition of public finances. Overall, our analysis suggests that quotas fail to remove the barriers that prevent women from achieving top political positions. joint work with Pamela Campa