We use a 12-dimensional VAR to examine the dynamic effects on the labor market of four structural technology and policy shocks. For each shock, we examine the dynamic e®ects on the labor market, the importance of the shock for labor market volatility, and the comovement between labor market...

We provide empirical evidence on the effects of tax liability changes in the United States. We make a distinction between “surprise” and “anticipated” tax shocks. Surprise tax cuts give rise to a large boom in the economy. Anticipated tax liability tax cuts are instead associated with a...

This paper explores on a yearly panel of nineteen OECD countries from 1970-2001 the effects of fiscal policy on private consumption in recessions and expansions. In the presence of binding liquidity constraints on households, fiscal policy is more e¤ective in boosting private consumption in...

We consider an economy where individuals face uninsurable risks to their human capital accumulation, and study the problem of determining the optimal level of linear taxes on capital and labor income together with the optimal path of the debt level. We show both analytically and numerically that...

This paper investigates the relationship between fiscal consolidation, business plans and firm investment. Based on a detailed narrative of tax changes in Germany covering 40 years of fiscal adjustments, we define and exploit the exogenous variation of tax bills to quantify the effect of tax...

The global financial crisis of 2008–09 has sent public debt on sharply higher trajectories. With the economic recovery gradually taking hold, the focus is now shifting to fiscal “exit” strategies. Medium-term consolidation efforts are likely to include not only tax increases but also...

Time-inconsistency can arise when a government attempts to convince private sector to use a particular alternative energy (gas, green electricity...) rather than petroleum products. By introducing taxes and feed-in prices, a government would encourage firms and households to switch to an...

In order to understand the dynamic effects of government spending on foreign trade the present paper proceeds in two steps. First, using U.S. time series data for the post-Bretton-Woods period, the dynamic effects of government spending are investigated within a structural Vector Autoregression...

In this paper we identify conditions under which the introduction of a pay-as-you-go social security system is ex ante Pareto-improving in a stochastic overlapping generations economy with capital accumulation and land. We argue that these conditions are consistent with many calibrations of the...

A realistic objective function for the atomistic central Bank and Treasury of a country adhering to a fixed exchange rate agreement like the EMS, would contain the public debt ;evel, to be minimized for example to meet one of the requirements contained in the Maastricht Treaty, and foreign...