A macro model is developed incorporating the productive e®ects of public expenditure, but also allowing for congestion. The Pigouvian tax rate to correct for the distortion caused by congestion is found and the optimal level of public expenditure is characterized. JEL Classi ̄cation Numbers: E62, H54 Corresponding author: John Bennett, Department of Economics and Finance, Brunel university, Uxbr...

This paper deals with hyperbolic discounting in a macro context. Time consistency is discussed in terms of rational behavior and rational expectations. The theory is applied to the intertemporal consumption decision in order to explain undersaving in an economy. Moreover, possible implications on policy makers’ decisions on reforms and budget deficits are evinced. Finally, the Ricardian equival...

This paper investigates currency and financial crises in an optimizing general equilibrium model. It is shown that a rise in current and expected future budget deficits generates a real exchange rate appreciation and a decumulation of external assets, leading up to a currency crisis when foreign reserves approximate a critical level. Strong empirical support for our model is obtained by a probi...

This paper assesses whether the UK public finances were sustainable for the period 1919 to 2001 using a nonlinear representation of the debt to GDP ratio and thus provides a more robust test of debt sustainability. Empirical evidence supports debt sustainability. Moreover, the ESTAR representation is evidence that sustainability is the result of active debt management rather than tax-smoothing....

This paper uses a direct-projections approach to estimate the effect of capital gains taxation on realizations at state level and then develops framework for determining revenue-maximizing rates federal level. We find that elasticity revenues with respect tax rate over 10-year period is −0.5 −0.3, indicating cuts do not pay themselves 5 percentage point increase would yield $18 $30 billion in a...

Copyright © 2001 American Heart Association. All rights reserved. Print ISSN: 0009-7322. Online ISSN: Circulation is published by the American Heart Association. 7272 Greenville Avenue, Dallas, TX 72514 2001;103;62Circulation Koen Nieman, Peter van Ooijen, Benno Rensing, Matthijs Oudkerk and Pim J. de Feyter Four-Dimensional Cardiac Imaging With Multislice Computed Tomography http://circ.ahajou...

Can consumption externalities be a source of indeterminacy? The answer is negative in conventional wisdom. In this paper we show that consumption externalities establish local indeterminacy if the degree of decreasing impatience is sufficiently large. Dynamic models with indeterminacy are valuable as they tend to explain economic fluctuations without relying on exogenous shocks and question int...

We show that the fiscal authorities of high-tax countries can lack incentives to combat profit shifting tax havens. Instead, they have focus their enforcement efforts on relocating profits booked by multinationals in other countries, crowding out transactions shift havens, and reducing global payments multinational companies. The predictions our model are motivated supported analysis two new da...

We study fiscal rules using a sovereign default model. A debt-brake (spread-brake) rule imposes ceiling on the deficit when debt (spread) is above threshold. For our benchmark calibration, similar gains can be achieved with optimal or spread brake. However, for “Union” of heterogeneous economies, common brake generates larger than Furthermore, from abandoning may significant economies that are ...

Partisanship of state governors affects the efficacy US federal fiscal policy. Using close election data, we find partisan differences in marginal propensity to spend intergovernmental transfers: Republican less than Democratic governors. Correspondingly, Republican-led states have lower debt, (delayed) taxes, and initially economic activity. A New Keynesian model a monetary union implies sizab...