Fiscal Policy in a Networked Economy

An earlier version of this paper was entitled “Shock Propagation and the Fiscal Multiplier: the Role of Heterogeneity.” We are grateful to Daron Acemoglu, George-Marios Angeletos, Martin Beraja, Olivier Blanchard, Ricardo Caballero, Arnaud Costinot, Dave Donaldson, Andrea Ferrero (Discussant), Ben Golub, Isaac Liu, Jeremy Majerowitz, Andrea Manera, Laura Murphy, Jordan Norris, Elias Papaioannou, Otis Reid, Matthew Rognlie, Karthik Sastry, Lawrence Schmidt, Alp Simsek, Ludwig Straub, Robert Townsend, Ivan Werning, and seminar participants at Harvard, the 2021 NBER Summer Institute Impulse and Propagation Mechanisms Meeting, Stony Brook, Georgetown, the Brookings Institute, the Central Bank of Chile, Oxford, the University of Southern California, the Junior Virtual Macro Conference, the 2022 ASSA Annual Meeting, the 2023 Biennial European Central Bank Conference, the 2021 European Winter Meeting of the Econometric Society, MIT Macro Lunch, and MIT Trade Tea for helpful comments. We also thank RIMS staff members at the Bureau of Economic Analysis for a helpful discussion. First posted version: April 18, 2020. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.

• December 29, 2021