Auray, Stéphane; de Blas, Beatriz; Eyquem, Aurélien - In: Journal of Economic Dynamics and Control 35 (2011) 9, pp. 1531-1546
This paper analyzes jointly optimal fiscal and monetary policies in a small open economy with capital and sticky prices. We allow for trade in consumption goods under perfect international risk-sharing. We consider balanced-budget fiscal policies where authorities use distortionary taxes on...