combination of a drop in total factor productivity (TFP) during 1990-92 and of increases in taxes on labor and consumption and …

accounted for by the evolution of taxes in an otherwise standard neoclassical growth model. Although taxes play a crucial role …, we cannot argue that taxes drive all of the movements in hours worked. In particular, the model underpredicts the large …

By preemptive austerity, we mean a policy that increases taxes to deter potential rollover crises. The policy is so … eliminates the danger. Mechanically, high taxes make the safe zone in the model -- the set of sovereign debt levels for which the … reduce the level of debt to a point where, asymptotically, high taxes are no longer necessary …