Optimal Fiscal Policy In A Business Cycle Model
Download Optimal Fiscal Policy In A Business Cycle Model full books in PDF, epub, and Kindle. Read online free Optimal Fiscal Policy In A Business Cycle Model ebook anywhere anytime directly on your device. Fast Download speed and no annoying ads. We cannot guarantee that every ebooks is available!
Author | : V. V. Chari |
Publisher | : |
Total Pages | : 66 |
Release | : 1993 |
Genre | : Business cycles |
ISBN | : |
This paper develops the quantitative implications of optimal fiscal policy in a business cycle model. In a stationary equilibrium the ex ante tax rate on capital income is approximately zero. There is an equivalence class of ex post capital income tax rates and bond policies that support a given allocation. Within this class the optimal ex post capital tax rates can range from being close to i.i.d. to being close to a random walk. The tax rate on labor income fluctuates very little and inherits the persistence properties of the exogenous shocks and thus there is no presumption that optimal labor tax rates follow a random walk. The welfare gains from smoothing labor tax rates and making ex ante capital income tax rates zero are small and most of the welfare gains come from an initial period of high taxation on capital income.
Author | : Kevin J. Lansing |
Publisher | : |
Total Pages | : 0 |
Release | : 1998 |
Genre | : |
ISBN | : |
This paper extends the real business cycle model with fiscal policy to allow for endogenous government expenditures and taxes. Fiscal policy in the model is determined by a government that seeks to maximize the welfare of a representative household under the assumption of commitment. On the revenue side, the government chooses an optimal program of distortionary taxes and borrowing in a dynamic version of the Ramsey (1927) optimal tax problem. On the expenditure side, government spending is disaggregated into an investment component that is productive and a consumption component that yields current period utility. The objective is to study the model's predictions for the behavior of the policy variables themselves. In particular, I try to account for the following empirical observations based on detrended post-war U.S. data: 1. Investment in the public-sector is less variable than private-sector investment. 2. Public consumption is more variable than private consumption. 3. The components of public-sector expenditures exhibit low correlations with output, in contrast to the highly procyclical nature of their private-sector counterparts. 4. The tax rate on capital income appears to be more variable than the tax rate on labor income. 5. Tax rates are weakly correlated with output. 6. The government debt-to-output ratio has a high standard deviation relative to output. 7. The government debt ratio exhibits a weak negative correlation with output. I find that a version of the model with multiple stochastic shocks (to technology and preferences) can broadly account for observations 1, 2, 4, 6, and 7. The model partially captures observation 3 but not observation 5.
Author | : Chaleampong Kongcharoen |
Publisher | : |
Total Pages | : 216 |
Release | : 2003 |
Genre | : Fiscal policy |
ISBN | : 9789743682483 |
Author | : Kenneth S. Rogoff |
Publisher | : MIT Press |
Total Pages | : 479 |
Release | : 2006-04 |
Genre | : Business & Economics |
ISBN | : 0262072726 |
The 20th NBER Macroeconomics Annual, covering questions at the cutting edge of macroeconomics that are central to current policy debates.
Author | : Kevin J. Lansing |
Publisher | : |
Total Pages | : 40 |
Release | : 1993 |
Genre | : Business cycles |
ISBN | : |
Author | : Baltasar Manzano |
Publisher | : |
Total Pages | : 34 |
Release | : 2000 |
Genre | : |
ISBN | : |
Author | : Jang-Ting Guo |
Publisher | : |
Total Pages | : 29 |
Release | : 1994 |
Genre | : Business cycles |
ISBN | : |
Author | : Stephanie Schmitt-Grohé |
Publisher | : |
Total Pages | : 80 |
Release | : 2006 |
Genre | : Fiscal policy |
ISBN | : |
Under an income-tax regime, the optimal income tax rate is quite stable, with a mean of 30 percent and a standard deviation of 1.1 percent. Simple monetary and fiscal rules are shown to implement a competitive equilibrium that mimics well the one induced by the Ramsey policy. When the fiscal authority is allowed to tax capital and labor income at different rates, optimal fiscal policy is characterized by a large and volatile subsidy on capital.
Author | : Ms.Jenny Elisabeth Ligthart |
Publisher | : International Monetary Fund |
Total Pages | : 29 |
Release | : 1998-09-01 |
Genre | : Business & Economics |
ISBN | : 145185661X |
The paper studies the setting of optimal fiscal policy in a second-best world with environmental externalities. The optimal second-best pollution tax is shown to lie below the first-best Pigovian tax, particularly if substitution between labor and polluting intermediate inputs is easy, the labor supply curve is more elastic, and preexisting taxes are large. The optimal level of public abatement is derived from the modified Samuelson rule and is larger if society cares more for the environment, public funds are inexpensive, and public abatement is relatively productive. The analysis also shows that the Samuelson rule should be revised if allowance is made for nonseparabilities in preferences.
Author | : Michael T. Gapen |
Publisher | : International Monetary Fund |
Total Pages | : 40 |
Release | : 2003-11-01 |
Genre | : Business & Economics |
ISBN | : 1451875371 |
This paper highlights the importance of debt composition in setting optimal fiscal and monetary policy over short-run business cycles and in the long run. Nominal debt as state-contingent debt can be a significant policy tool to reduce the volatility of distortionary government policy, thereby reducing macroeconomic volatility while increasing equilibrium output and consumption. The welfare gain from using nominal debt to hedge against shocks to the government budget is as large as the welfare gain from the ability to issue debt.