Loukoianova, E.; Vahey, S.P.; Wakerly, Elizabeth C. - Faculty of Economics, University of Cambridge - 2002
In this paper we consider the real-time implementation of a fiscal policy rule based on tax smoothing (Barro (1979) and 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...