Showing 1 - 10 of 96
In this paper an anti-cyclical fiscal policy rule is introduced into a dynamic stochastic general equilibrium model with New-Keynesian features. The rule allows the deficit to deviate from target in proportion to the impact of automatic stabilisers while any additional impact on the deficit, for...
Persistent link: https://www.econbiz.de/10005083214
Persistent link: https://www.econbiz.de/10012112413
inflation and output, hump-shaped impulse responses of inflation to monetary shocks, and the fact that high trend inflation …
Persistent link: https://www.econbiz.de/10005083192
The recent crisis in the United States has often been associated with substantial amounts of policy uncertainty. In this paper we ask how uncertainty about fiscal policy affects the impact of fiscal policy changes on the economy when the government tries to counteract a deep recession. The...
Persistent link: https://www.econbiz.de/10010957088
improves the international diversification of domestic output risk, increases the efficiency of domestic investment and - for a … from Ramsey optimal plans. We show analytically that default is optimal following adverse shocks to domestic output … wealth levels, default is optimal only in response to disaster-like shocks to domestic output, and that following such shocks …
Persistent link: https://www.econbiz.de/10010957095
Recent macro developments in the euro area have highlighted the interactions between fiscal policy, sovereign debt, and financial fragility. We take a structural macroeconomic model with frictions in the financial intermediation process, in line with recent research, but introduce asset choice...
Persistent link: https://www.econbiz.de/10010957129
The empirical and theoretical literature on long-term relationships in public finance is dominated by two approaches: Fiscal sustainability and Wagner's law of an increasing state activity. In this paper, we argue that these two relationships should be analyzed simultaneously and not separately....
Persistent link: https://www.econbiz.de/10010957133
Fiscal rules, such as the excessive deficit procedure and the stability and growth pact (SGP), aim at constraining government behavior. Milesi-Ferretti (2003) develops a model in which governments circumvent such rules by reverting to creative accounting. The amount of this creative accounting...
Persistent link: https://www.econbiz.de/10005083124
We investigate the effects of official fiscal data and creative accounting signals on interest rate spreads between bond yields in the European Union. Our model predicts that risk premia contained in government bond spreads should increase in both, the official fiscal position and the expected...
Persistent link: https://www.econbiz.de/10005083134
In a dynamic model of fiscal policy, social polarization provokes a deficit bias. Policy advisors have recently proposed that governments running a deficit should be forced to generate additional tax revenue. We show that this deficit taxation reduces the deficit bias as it internalizes the...
Persistent link: https://www.econbiz.de/10005083191