https://github.com/pmichaillat/stimulus-spending

Code and data for the paper "Optimal Public Expenditure with Inefficient Unemployment"
https://github.com/pmichaillat/stimulus-spending

business-cycles multiplier optimal-policy paper-with-code public-expenditure simulations stimulus-package unemployment unemployment-gap

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Code and data for the paper "Optimal Public Expenditure with Inefficient Unemployment"

• Host: GitHub
• URL: https://github.com/pmichaillat/stimulus-spending
• Owner: pmichaillat
• License: mit
• Created: 2022-03-23T15:13:42.000Z (almost 3 years ago)
• Default Branch: main
• Last Pushed: 2024-02-10T18:43:27.000Z (11 months ago)
• Last Synced: 2024-02-11T00:29:30.060Z (11 months ago)
• Topics: business-cycles, multiplier, optimal-policy, paper-with-code, public-expenditure, simulations, stimulus-package, unemployment, unemployment-gap
• Language: MATLAB
• Homepage: https://pascalmichaillat.org/6/
• Size: 18.6 KB
• Stars: 1
• Watchers: 2
• Forks: 0
• Open Issues: 0
• Metadata Files:
  • Readme: README.md
  • License: LICENSE.md

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README

        
# Optimal Public Expenditure with Inefficient Unemployment: Code and Data

This repository contains the code and data accompanying the paper "Optimal Public Expenditure with Inefficient Unemployment", written by [Pascal Michaillat](https://pascalmichaillat.org) and [Emmanuel Saez](https://eml.berkeley.edu/~saez/), and published in the [Review of Economic Studies](https://doi.org/10.1093/restud/rdy030) in May 2019. 

## Paper webpage

The paper and its online appendix are available at https://pascalmichaillat.org/6/.

## Figure 3

Figure 3 is produced by the MATLAB script `figure3.m`.

+ The script first calibrates the sufficient-statistic formulas (23) and (24) to describe

the onset of the Great Recession in the United States. The calibration of the two formulas is described in section 4.

+ The script then uses formula (23) to compute optimal stimulus spending and formula (24) to compute the unemployment rate reached under optimal stimulus. The formulas are used under a range of unemployment multipliers and a range of elasticities of substitution between public and private consumption.

+ The script then produces the two panels of figure 3: `figure3A.pdf`, `figure3B.pdf`.

## Figure 4

Figure 4 is produced by the MATLAB script `figure4.m`.

+ The script first calibrates the matching model with land to US data. The model is

described in sections 2.2 and 2.4 and in online appendix A. The calibration is described in online appendix A.

+ The script then computes collections of steady-state equilibria, parameterized by

different levels of aggregate demand; these collections represent the different stages of

the business cycle. The simulation procedure is described in section 5.

+ The script compares three public-expenditure policies: G/Y is constant at 16.5%, its average value in the United States for 1990-2014; G/Y is given by sufficient-statistic formula (23) (a first-order approximation to the optimal policy); and G/Y is at its optimal level, where it satisfies equation (18).

+ Last the script produces the four panels of figure 4: `figure4A.pdf`, `figure4B.pdf`, `figure4C.pdf`, `figure4D.pdf`.

## Software

The results were obtained on a Mac running macOS High Sierra with MATLAB R2017a.

## License

The content of this repository is licensed under the terms of the MIT License.