Wakerly, Elizabeth C; Loukoianova, Elena; Vahey, Shaun P. - Royal Economic Society - RES - 2003
We consider the real-time implementation of a fiscal policy rule based on tax smoothing (Barro (1979), Bohn (1998)). We show that the tax smoothing approach, augmented by fiscal habit considerations, provides a surprisingly accurate description of US budget surplus movements. In order to...