The paper argues that the government-spending multiplier can be significantly larger than one when the nominal interest rate is at the zero lower bound. In a dynamic, stochastic, general equilibrium model, the multiplier is substantially larger than one when the zero bound binds. The multiplier is influenced by the fraction of government spending occurring while the nominal interest rate is zero and the output cost of being in the zero-bound state. The model is consistent with macroeconomic behavior during the financial crisis. The government-spending multiplier is large in economies where the zero-bound state has significant output costs. The multiplier is also positively related to how long the zero bound is expected to bind. The paper also considers the impact of implementation lags on the multiplier, finding that the multiplier is larger when government spending comes online in periods when the zero bound binds. The analysis shows that the government-spending multiplier is larger when capital accumulation is present. The paper also discusses the sensitivity of the multiplier to parameter values and the importance of timing in government spending. The results suggest that fiscal policy can be effective in combating output losses associated with the zero-bound state if government spending is implemented in a timely manner. The paper also considers the role of distortionary taxes and the optimal trade-off between government spending and inflation. The analysis is related to recent literature on the zero bound and highlights the importance of understanding the multiplier in the context of the zero-bound state. The paper concludes that the government-spending multiplier can be large in the zero-bound state and that fiscal policy can be an effective tool for countering output losses in such scenarios.The paper argues that the government-spending multiplier can be significantly larger than one when the nominal interest rate is at the zero lower bound. In a dynamic, stochastic, general equilibrium model, the multiplier is substantially larger than one when the zero bound binds. The multiplier is influenced by the fraction of government spending occurring while the nominal interest rate is zero and the output cost of being in the zero-bound state. The model is consistent with macroeconomic behavior during the financial crisis. The government-spending multiplier is large in economies where the zero-bound state has significant output costs. The multiplier is also positively related to how long the zero bound is expected to bind. The paper also considers the impact of implementation lags on the multiplier, finding that the multiplier is larger when government spending comes online in periods when the zero bound binds. The analysis shows that the government-spending multiplier is larger when capital accumulation is present. The paper also discusses the sensitivity of the multiplier to parameter values and the importance of timing in government spending. The results suggest that fiscal policy can be effective in combating output losses associated with the zero-bound state if government spending is implemented in a timely manner. The paper also considers the role of distortionary taxes and the optimal trade-off between government spending and inflation. The analysis is related to recent literature on the zero bound and highlights the importance of understanding the multiplier in the context of the zero-bound state. The paper concludes that the government-spending multiplier can be large in the zero-bound state and that fiscal policy can be an effective tool for countering output losses in such scenarios.