This paper explores the conditions under which the government-spending multiplier can be significantly larger than one, particularly when the nominal interest rate is at its zero lower bound. The authors develop a dynamic, stochastic, general equilibrium model to investigate this phenomenon. They find that the multiplier effect is substantial when the zero bound binds, and it is largest when a large fraction of government spending occurs during the zero interest rate period. The model's predictions align well with the behavior of key macro aggregates during the recent financial crisis. The paper also examines the sensitivity of the multiplier to various parameters and the timing of government spending, concluding that fiscal policy can be highly effective when implemented promptly and during periods of high output costs associated with the zero-bound state.This paper explores the conditions under which the government-spending multiplier can be significantly larger than one, particularly when the nominal interest rate is at its zero lower bound. The authors develop a dynamic, stochastic, general equilibrium model to investigate this phenomenon. They find that the multiplier effect is substantial when the zero bound binds, and it is largest when a large fraction of government spending occurs during the zero interest rate period. The model's predictions align well with the behavior of key macro aggregates during the recent financial crisis. The paper also examines the sensitivity of the multiplier to various parameters and the timing of government spending, concluding that fiscal policy can be highly effective when implemented promptly and during periods of high output costs associated with the zero-bound state.