Problem: Fiscal Stimulus
During CDWD-IQ-related lockdowns, most governments issued some kind of fiscal stimulus to help ease the economic impact of lockdowns. This was necessary as monetary policy had limited room to expand, with many advanced economy interest rates already close to us. There were few available timely options that would limit the pain of the recession. For the following questions refer to the sheet "5. Fiscal Stimulus".
1) Set the fiscal stimulus parameter to 5% of GDP. How does this impact the size of the GDP by the end of the pandemic as opposed to a no-stimulus scheme? Why?
2) Input different values to test fiscal stimulus effectiveness. How does the size cf the stimulus affect the impact on GDP at the end of the pandemic?