Large and growing levels of public debt in the United States, United Kingdom, Japan and the Euro Area raise new interest in the cross-country effects of a large open economy's deficits. We consider a dynamic optimizing model with costly tax collection and exogenously given public spending and...

The paper surveys a number of neo-classical and neo-Keynesian approcaches to government financial policy. After reviewing the very restrictive conditions under which financial policy is just a veil without real consequences, non-neutral financial policy in neo-classical models is analyzed. At...

The paper surveys a number of neo-classical and neo-Keynesian approcaches to government financial policy. After reviewing the very restrictive conditions under which financial policy is just a veil without real consequences, non-neutral financial policy in neo-classical models is analyzed. At...

Large and growing levels of public debt in the United States, United Kingdom, Japan and the Euro Area raise new interest in the cross-country effects of a large open economy's deficits. We consider a dynamic optimising model with costly tax collection and exogenously given public spending and...

The paper develops a model explaining why IMF programs are less likely to be concluded before national election dates. Since conclusion of an IMF arrangement may signal the incumbent's incompetence, rational voters use this signal when deciding upon his re-election. In order to demonstrate...