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A New Keynesian model allowing for an active monetary and passive fiscal policy (AMPF) regime and a passive monetary and active fiscal policy (PMAF) regime is fit to various U.S. samples from 1955 to 2007. Data in the pre-Volcker periods strongly prefer an AMPF regime, but the estimation is not very informative about whether the inflation coefficient in the interest rate rule exceeds one in pre-Volcker samples. Also, whether a government spending increase yields positive consumption in a PMAF regime depends on price stickiness. An income tax cut can yield a negative labor response if monetary policy aggressively stabilizes output.

Inflation --- Macroeconomics --- Public Finance --- Taxation --- Price Level --- Deflation --- National Government Expenditures and Related Policies: General --- Fiscal Policy --- Taxation, Subsidies, and Revenue: General --- Labor Economics: General --- Public finance & taxation --- Labour --- income economics --- Expenditure --- Fiscal policy --- Income tax systems --- Labor --- Prices --- Expenditures, Public --- Income tax --- Labor economics --- United States --- Monetary policy --- Income economics

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Effects of government investment are studied in an estimated neoclassical growth model. The analysis focuses on two dimensions that are critical for understanding government investment as a fiscal stimulus: implementation delays for building public capital and expected fiscal adjustments to deficit-financed spending. Implementation delays can produce small or even negative labor and output responses to increases in government investment in the short run. Anticipated fiscal adjustments matter both quantitatively and qualitatively for long-run growth effects. When public capital is insufficiently productive, distorting financing can make government investment contractionary at longer horizons.

Expenditures, Public. --- Public investments. --- Government investments --- Investments, Public --- Expenditures, Public --- Investments --- Capital budget --- Economic development projects --- Investment of public funds --- Appropriations and expenditures --- Government appropriations --- Government expenditures --- Government spending --- Public expenditures --- Public spending --- Spending, Government --- Finance, Public --- Public administration --- Government spending policy --- Finance --- Macroeconomics --- Public Finance --- Production and Operations Management --- Fiscal Policy --- Debt --- Debt Management --- Sovereign Debt --- Bayesian Analysis: General --- National Government Expenditures and Related Policies: Infrastructures --- Other Public Investment and Capital Stock --- National Government Expenditures and Related Policies: General --- Employment --- Unemployment --- Wages --- Intergenerational Income Distribution --- Aggregate Human Capital --- Aggregate Labor Productivity --- Macroeconomics: Consumption --- Saving --- Wealth --- Public finance & taxation --- Public investment spending --- Expenditure --- Capital productivity --- Fiscal consolidation --- Government consumption --- Production --- Fiscal policy --- National accounts --- Public investments --- Consumption --- Economics --- United States

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Natural resource revenues are an increasingly important financing source for public investment in many developing economies. Investing volatile resource revenues, however, may subject an economy to macroeconomic instability. This paper applies to Angola the fiscal framework developed in Berg et al. (forthcoming) that incorporates investment inefficiency and absorptive capacity constraints, often encountered in developing countries. The sustainable investing approach, which combines a stable fiscal regime with external savings, can convert resource wealth to development gains while maintaining economic stability. Stochastic simulations demonstrate how the framework can be used to inform allocations between capital spending and external savings when facing uncertain oil revenues. An overly aggressive investment scaling-up path could result in insufficient fiscal buffers when faced with negative oil price shocks. Consequently, investment progress can be interrupted, driving up the capital depreciation rate, undermining economic stability, and lowering the growth benefits of public investment.

Petroleum industry and trade --- Capital investments --- Capital expenditures --- Capital improvements --- Capital spending --- Fixed asset expenditures --- Plant and equipment investments --- Plant investments --- Investments --- Energy industries --- Oil industries --- Investments: Energy --- Macroeconomics --- Public Finance --- Taxation --- Exhaustible Resources and Economic Development --- Investment --- Capital --- Intangible Capital --- Capacity --- Economic Growth of Open Economies --- One, Two, and Multisector Growth Models --- Business Taxes and Subsidies --- National Government Expenditures and Related Policies: Infrastructures --- Other Public Investment and Capital Stock --- Energy: Demand and Supply --- Prices --- National Government Expenditures and Related Policies: General --- Energy: General --- Public finance & taxation --- Investment & securities --- Oil, gas and mining taxes --- Public investment spending --- Oil prices --- Expenditure --- Oil --- Taxes --- Commodities --- Public investments --- Expenditures, Public --- Angola

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To investigate the effects on Papua New Guinea’s economy of substantial liquified natural gas revenues arriving in 2015, we employ a model to examine the macroeconomic effects of a scalingup of natural resource windfall revenues and the implications for a variety of policy responses. The model is a multi-sector dynamic stochastic general equilibrium (DSGE) model, and features components that allow for a detailed study of the effects of both fiscal and monetary policy in response to a positive shock to the mineral resource value of a country. The model contains tradable, non-tradable, and mining sectors, as well as an independent central bank and fiscal authority. We calibrate the model to the current economy of Papua New Guinea and run a suite of policy simulations. We find that macroeconomic effects from a resource boom typically associated with Dutch Disease effects such as a real appreciation and a fall in tradable sector production stem largely from the non-tradable component of government spending. The central bank can offset the real appreciation, but not without crowding out the private sector. A sovereign wealth fund (SWF), combined with a smooth capital spending path, entails the best means of dealing with macroeconomic volatility and maintaining a stable fiscal regime.

Natural resources --- National resources --- Resources, Natural --- Resource-based communities --- Resource curse --- Economic aspects --- Papua New Guinea --- Economic conditions. --- Macroeconomics --- Public Finance --- Natural Resources --- Exhaustible Resources and Economic Development --- Investment --- Capital --- Intangible Capital --- Capacity --- Economic Growth of Open Economies --- One, Two, and Multisector Growth Models --- National Government Expenditures and Related Policies: General --- Agricultural and Natural Resource Economics --- Environmental and Ecological Economics: General --- Macroeconomics: Consumption --- Saving --- Wealth --- Fiscal Policy --- National Government Expenditures and Related Policies: Infrastructures --- Other Public Investment and Capital Stock --- Public finance & taxation --- Environmental management --- Expenditure --- Consumption --- Fiscal policy --- Public investment spending --- Environment --- National accounts --- Expenditures, Public --- Economics --- Public investments

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This paper presents the DIGNAR (Debt, Investment, Growth, and Natural Resources) model, which can be used to analyze the debt sustainability and macroeconomic effects of public investment plans in resource-abundant developing countries. DIGNAR is a dynamic, stochastic model of a small open economy. It has two types of households, including poor households with no access to financial markets, and features traded and nontraded sectors as well as a natural resource sector. Public capital enters production technologies, while public investment is subject to inefficiencies and absorptive capacity constraints. The government has access to different types of debt (concessional, domestic and external commercial) and a resource fund, which can be used to finance public investment plans. The resource fund can also serve as a buffer to absorb fiscal balances for given projections of resource revenues and public investment plans. When the fund is drawn down to its minimal value, a combination of external and domestic borrowing can be used to cover the fiscal gap in the short to medium run. Fiscal adjustments through tax rates and government non-capital expenditures—which may be constrained by ceilings and floors, respectively—are then triggered to maintain debt sustainability. The paper illustrates how the model can be particularly useful to assess debt sustainability in countries that borrow against future resource revenues to scale up public investment.

Debts, Public --- Economic development --- Public investments --- Government investments --- Investments, Public --- Expenditures, Public --- Investments --- Capital budget --- Economic development projects --- Investment of public funds --- Development, Economic --- Economic growth --- Growth, Economic --- Economic policy --- Economics --- Statics and dynamics (Social sciences) --- Development economics --- Resource curse --- Debts, Government --- Government debts --- National debts --- Public debt --- Public debts --- Sovereign debt --- Debt --- Bonds --- Deficit financing --- Econometric models. --- Finance --- Exports and Imports --- Public Finance --- Taxation --- Natural Resources --- Exhaustible Resources and Economic Development --- Investment --- Capital --- Intangible Capital --- Capacity --- Fiscal Policy --- International Lending and Debt Problems --- National Government Expenditures and Related Policies: Infrastructures --- Other Public Investment and Capital Stock --- Agricultural and Natural Resource Economics --- Environmental and Ecological Economics: General --- Debt Management --- Sovereign Debt --- Business Taxes and Subsidies --- Public finance & taxation --- Environmental management --- International economics --- Public investment spending --- Natural resources --- Commercial borrowing --- Consumption taxes --- Expenditure --- Environment --- External debt --- Taxes --- Debts, External --- Spendings tax --- Angola