Di Bartolomeo, Giovanni and Manzo, Marco (2007): Do tax distortions lead to more indeterminacy? A New Keynesian perspective.
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Following the recent developments of the literature on stabilization policies, this paper investigates the effect of tax distortions on equilibrium determinacy in a New Keynesian economy with rule-of-thumb consumers and capital accumulation. In particular, we focus on the inter-action between monetary policy and tax distortions in supporting the saddle-path equilibrium under the assumptions of balanced budget and monetary policy satisfying a Taylor rule.
|Item Type:||MPRA Paper|
|Institution:||University of Teramo|
|Original Title:||Do tax distortions lead to more indeterminacy? A New Keynesian perspective|
|Keywords:||Rule-of-thumb consumers; equilibrium determinacy; fiscal and monetary policy inter-actions; and tax distortions|
|Subjects:||E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, Macroeconomic Policy, and General Outlook > E61 - Policy Objectives; Policy Designs and Consistency; Policy Coordination
E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, Macroeconomic Policy, and General Outlook > E63 - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy
|Depositing User:||Giovanni Di Bartolomeo|
|Date Deposited:||14. Jun 2007|
|Last Modified:||07. Jan 2014 21:30|
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