This paper discusses monetary and fiscal interactions in fiscal stress with no outright default. Two distortions prevail in the economy: income taxes and liquidity constraints. Possible obstructions to fiscal policy include: a ceiling on the equilibrium Debt-to-GDP ratio; zero elasticity of tax...

I discuss the joint effects of government-taxes and interest-rates. A fiscal authority performs `exogenous' and `endogenous' changes to the income-tax rate and a monetary authority sets the nominal-interest. A wedge between rates of self-financing of tax cuts and the income-tax Laffer curve...

This paper specifi…es determinacy regions in the parameter space of monetary and …fiscal policy interactions in economies with …finance and tax distortions. It shows that the initial valuation of government debt is the …fixed point of a continuous mapping that takes a closed interval on the...

This paper offers a fi…xed-point approach to the issue of price level determination in general equilibrium. It arrives at a solution method for rational expectations models with missing initial conditions for financial wealth. The paper emphasizes the calculation of an equilibrium initial...

This paper studies how the presence of an income tax changes the properties of general equilibrium models. It fi…nds that relative to the previous literature [following Leeper (1991)] a new area of determinacy exists where a passive …fiscal rule combined with a passive monetary rule can still...