HSE (FES/ICEF) International Webinar - Sarah Zubairy

Dear colleagues,

We are very happy to announce the next talk of our webinar series.  
On Thursday, September 23, 16:20 - 17:40  (Moscow time, GMT+3) Sarah Zubairy  (Texas A&M University) will present her paper "State dependent government spending multipliers: Downward nominal wage rigidity and sources of business cycle fluctuations" (joint with Yoon J. Jo).

 The seminar will be held online in zoom: https://us02web.zoom.us/j/84639632497

Abstract: We consider a New Keynesian model with downward nominal wage rigidity (DNWR) and show that government spending is much more effective in stimulating output in a low-inflation recession relative to a high-inflation recession. The government spending multiplier is large when DNWR binds, but the nature of recession matters due to the opposing response of inflation. In a demand-driven recession, inflation falls, preventing real wages from falling, leading to unemployment, while inflation rises in a supply-driven recession limiting the consequences of DNWR on employment. We document supporting empirical evidence, using both historical time series data and cross-sectional data from U.S. states.