Government spending weakens impact of monetary policy shocks in US economy.
The researchers looked at how monetary and fiscal policies work together in the U.S. economy. They used a special model to see how these policies affect each other over time. The study found that when the government spends more money or gives temporary cash to people, it weakens the impact of changes in interest rates. But if the government gives out money permanently, it doesn't do as much to counteract the effects of interest rate changes. Tax changes, on the other hand, don't really change how interest rate changes spread through the economy.