Time-consistent optimal fiscal policy over the business cycle
نویسندگان
چکیده
منابع مشابه
Fiscal policy over the real business cycle: A positive theory
This paper presents a political economy theory of the behavior of fiscal policy over the business cycle. The theory predicts that, in both booms and recessions, fiscal policies are set so that the marginal cost of public funds obeys a submartingale. In the short run, fiscal policy can be pro-cyclical with government debt spiking up upon entering a boom. However, in the long run, fiscal policy i...
متن کاملFiscal Policy over the Real Business Cycle: A Positive Theory1
This paper explores the implications of the political economy model of Battaglini and Coate (2008) for the behavior of fiscal policy over the business cycle. The model predicts that fiscal policy is counter-cyclical with debt increasing in recessions and decreasing in booms. Public spending increases in booms and decreases during recessions, while tax rates decrease during booms and increase in...
متن کاملOptimal Contingent Fiscal Policy in a Business Cycle Model
The indeterminacy of the optimal fiscal policy that emerges in a stochastic setting has been characterized by Zhu (1992) and Chari, Christiano and Kehoe (1994). There are infinite paths of ex-post capital income tax rates and state-contingent debt return supporting the optimal allocations of consumption, investment and leisure. The main goal of this paper is to introduce identification constrai...
متن کاملOptimal time-consistent monetary and fiscal policy under sticky prices
This paper studies optimal monetary and fiscal policy in a stochastic economy with sticky prices and monopolistic competition on its product markets. Our main objective is to characterize optimal time-consistent (Markov) policies and to compare their characteristics to the ones implemented by a Ramsey policy maker. We perform this comparison within the framework of a stochastic production econo...
متن کاملOptimal and Time Consistent Monetary and Fiscal Policy in a Small Open Economy
This paper shows that optimal fiscal and monetary policy is generally time consistent in a standard small open economy. Further, there exist many maturity structures of public debt capable of rendering the optimal policy time consistent. This result is in sharp contrast with that obtained by others in the context of closedeconomy models. In the closed economy, the time consistency of optimal mo...
متن کاملذخیره در منابع من
با ذخیره ی این منبع در منابع من، دسترسی به آن را برای استفاده های بعدی آسان تر کنید
ژورنال
عنوان ژورنال: Quantitative Economics
سال: 2015
ISSN: 1759-7323
DOI: 10.3982/qe370