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Existence, uniqueness and computation of solutions to dynamic models with occasionally binding constraints

Holden, Tom D. - 2016

We present the first necessary and sufficient conditions for the existence of a unique perfect-foresight solution, returning to a given steady-state, in an otherwise linear model with occasionally binding constraints. We derive further conditions on the existence of a solution in such models,...

Persistent link: https://www.econbiz.de/10011422742

Countercyclical versus Procyclical Taylor Principles

Chatelain, Jean-Bernard - 2016

Assuming inflation is a forward variable in Taylor (1999) model, this paper finds opposite policy rule recommandations … with counter-cyclical policy rule parameters (Taylor principle: inflation rule larger than one and bounded upwards) in the … case of optimal policy under commitment versus pro-cyclical policy rule parameters (inflation rule parameter below zero) in …

Persistent link: https://www.econbiz.de/10011444004

Computation of solutions to dynamic models with occasionally binding constraints

Holden, Tom D. - 2016

We construct the first algorithm for the perfect foresight solution of otherwise linear models with occasionally binding constraints, with fixed terminal conditions, that is guaranteed to return a solution in finite time, if one exists. We also provide a proof of the inescapability of the...

Persistent link: https://www.econbiz.de/10011514628

Government Solvency, Austerity and Fiscal Consolidation in the OECD: A Keynesian Appraisal of Transversality and No Ponzi Game Conditions

Azizi, Karim; Canry, Nicolas; Chatelain, Jean-Bernard; … - 2013

This paper investigates the relevance of the No-Ponzi game condition for public debt (i.e. the public debt growth rate has to be lower than the real interest rate, a necessary assumption for Ricardian equivalence) and of the transversality condition for the GDP growth rate (i.e. the GDP growth...

Persistent link: https://www.econbiz.de/10010311966

Macroprudential Regulation and the Role of Monetary Policy

Tayler, William; Zilberman, Roy - 2014

response to inflation in the central bank policy rule yield the lowest welfare losses. The findings emphasize the importance of …

Persistent link: https://www.econbiz.de/10010335198

A Real-Business-Cycle model with efficiency wages and fiscal policy: the case of Bulgaria

Vasilev, Aleksandar - 2016

In this paper we investigate the quantitative importance of efficiency wages in explaining fluctuations in Bulgarian labor markets. This is done by augmenting an otherwise standard real business cycle model a la Long and Plosser (1983) with unobservable workers effort by employers and wage...

Persistent link: https://www.econbiz.de/10011572678

A Real-Business-Cycle model with reciprocity in labor relations and fiscal policy: the case of Bulgaria

Vasilev, Aleksandar - 2017

In this paper we introduce reciprocity in labor relations and government sector to investigate how well the real wage rigidity that results out of that arrangement ex- plains business cycle fluctuations in Bulgaria. The reciprocity mechanism described in this paper follows Danthine and Kurmann...

Persistent link: https://www.econbiz.de/10011622575

Fiscal policy in a Real-Business-Cycle model with labor-intensive government services and endogenous public sector wages and hours

Vasilev, Aleksandar - 2013

Motivated by the high public employment, and the public wage premia observed in Europe, a Real-Business-Cycle model, calibrated to German data (1970-2007), is set up with a richer government spending side, and an endogenous private-public sector labor choice. To illustrate the effects of fiscal...

Persistent link: https://www.econbiz.de/10011493227

On the cost of rent-seeking by government bureaucrats in a Real-Business-Cycle framework

Vasilev, Aleksandar - 2013

This paper studies the wasteful effect of bureaucracy on the economy by addressing the link between rent-seeking behavior of government bureaucrats and the public sector wage bill, which is taken to represent the rent component. In particular, public officials are modeled as individuals...

Persistent link: https://www.econbiz.de/10011493228

On the cost of opportunistic behavior in the public sector: A General-Equilibrium approach

Vasilev, Aleksandar - 2016

This paper studies the wasteful effect of bureaucracy on the economy by addressing the link between opportunistic behavior of government bureaucrats and the public sector wage bill. In particular, public officials are modeled as individuals competing for a larger share of those public funds. A...

Persistent link: https://www.econbiz.de/10011495602