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dc.contributor.authorBEN ZEEV, Nadav
dc.contributor.authorPAPPA, Evi
dc.date.accessioned2015-01-22T15:31:36Z
dc.date.available2015-01-22T15:31:36Z
dc.date.issued2014
dc.identifier.issn1725-6704
dc.identifier.urihttps://hdl.handle.net/1814/34316
dc.description.abstractWe identify US defense news shocks as shocks that best explain future movements in defense spending over a five-year horizon and are orthogonal to current defense spending. Our identified shocks are strongly correlated with the Ramey (2011) news shocks, but explain a larger share of macroeconomic fluctuations and have significant demand effects. Fiscal news induces significant and persistent increases in output, consumption, investment, hours and the interest rate. Standard DSGE models fail to produce such a pattern. We propose a sticky price model with distortionary taxation, variable capital utilization, capital adjustment costs and rule-of-thumb consumers that replicates the empirical findings.en
dc.language.isoenen
dc.relation.ispartofseriesCEPR Discussion Paperen
dc.relation.ispartofseries2014/9948en
dc.subjectDefense spending newsen
dc.subjectDSGE modelen
dc.subjectMaximum forecast error varianceen
dc.subjectSVARen
dc.subjectE62en
dc.subjectE65en
dc.subjectH30en
dc.titleChronicle of a war foretold : the macroeconomic effects of anticipated defense spending shocksen
dc.typeWorking Paperen
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