No they don't
2009-10-16 · Original WordPress address
Paul Krugman:
A perfectly standard New Keynesian model, with intertemporal optimization and all that — the kind of model that is standard in freshwater courses — says that under current conditions fiscal stimulus should be very strong... (emphasis added)
The abstract from a perfectly standard New Keynesian model:
This paper argues that if the zero bound on nominal interest rates is binding [and monetary policy is passive], then the government spending multiplier is large.
From today's WSJ:
