@article{2f3357e239194aa99053d24c8483b13f,
title = "Excess Savings and Twin Deficits: The Transmission of Fiscal Stimulus in Open Economies",
abstract = "We study the effects of debt-financedfiscal transfers in a general equilib-rium, heterogeneous-agent model of the world economy. In the long run,increases in government debt anywhere raise the world interest rate andincrease private wealth everywhere. In the short run, a country with alarger-than-averagefiscal deficit experiences both a large increase in pri-vate savings (“excess savings”) and a small but persistent current accountdeficit (a slow-motion“twin deficit”). These patterns are consistent withthe evolution of the world{\textquoteright}s balance of payments since the beginning ofthe COVID-19 pandemic.",
author = "Rishabh Aggarwal and Adrien Auclert and Matthew Rognlie and Ludwig Straub",
note = "Funding Information: Authors{\textquoteright} email addresses: Aggarwal (arishabh@stanford.edu), Auclert (aauclert@stan ford.edu), Rognlie (matthew.rognlie@northwestern.edu), Straub (ludwigstraub@fas.har vard.edu). This research is supported by National Science Foundation grant numbers SES-1851717 and SES-2042691. We thank our discussants Oleg Itskhoki, Fabrizio Perri, and Linda Tesar as well as Luigi Bocola, Larry Christiano, Marty Eichenbaum, Pierre-Olivier Gourinchas, Calvin He, Kilian Huber, Anders Humlum, Sẹ bnem Kalemli-{\"O}zcan, Greg Kaplan, Rohan Kekre, Thibaut Lamadon, Elisa Rubbo, Giovanni Sciacovelli, Daan Struyven, and Christian Wolf for helpful comments. We thank Agustin Barboza for excellent research assistance. We thank Erica Deadman, Peter Ganong, Fiona Greig, and Pascal Noel for sharing JPMorgan Chase Institute data. For acknowledgments, sources of research support, and disclosure of the authors{\textquoteright} material financial relationships, if any, please see https://www.nber.org/books-and-chapters/nber-macroeconomics-annual-2022 -volume-37/excess-savings-and-twin-deficits-transmission-fiscal-stimulus-open-economies. Publisher Copyright: {\textcopyright} 2023, University of Chicago Press. All rights reserved.",
year = "2023",
month = jan,
day = "1",
doi = "10.1086/723586",
language = "English (US)",
volume = "37",
pages = "325--412",
journal = "NBER Macroeconomics Annual",
issn = "0889-3365",
publisher = "University of Chicago Press",
number = "1",
}