Tsuruga, TakayukiWake, Shota2023-09-180165-1889http://hdl.handle.net/1885/299620Previous studies argue that, based on the New Keynesian framework, a fiscal stimulus financed by money creation has a strong positive effect on output under a reasonable degree of nominal price rigidities. This paper investigates the effects of an implementation lag in a money-financed fiscal stimulus on output. We show that if a money-financed government purchase has a time lag between the decision and the implementation: (1) it may cause a recession rather than a boom when the economy is in normal times; (2) it may deepen a recession when the economy is in a liquidity trap; (3) the longer the implementation lag, the deeper the recession; and (4) the depth of the recession depends on the interest semi-elasticity of money demand. Our results imply that, if money demand is unstable, the money-financed fiscal stimulus with an implementation lag may have unstable effects on output, in contrast to the debt-financed fiscal stimulus.The effects of an anticipated shock.” Takayuki Tsuruga acknowledges the financial support from Grants-in-Aid for Scientific Research (15H05729 and 15H05728), the Murata Science Foundation, and the Zengin Foundation for Studies on Economics and Finance.application/pdfen-AU© 2019 The authorsAnticipation effectFiscal multiplierGovernment spendingSeigniorage201910.1016/j.jedc.2019.05.0072022-07-31