Grechyna, Daryna (2015): Debt and Deficit Fluctuations in a Time-Consistent Setup. Forthcoming in: Macroeconomic Dynamics
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Abstract
This paper compares the stochastic behavior of fiscal variables under optimal fiscal policy for the cases of full commitment by the government (Ramsey problem) and no commitment by the government (focusing on differentiable Markov perfect equilibrium). It shows that the cyclical properties of fiscal variables are similar for both commitment assumptions. These conclusions are robust to two different specifications of the structure of public bonds (risk-free and state-contingent), and to different sets of the parameters. The cyclical properties of fiscal variables, regardless of commitment assumptions, can be determined by the parameters of the utility function.
Item Type: | MPRA Paper |
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Original Title: | Debt and Deficit Fluctuations in a Time-Consistent Setup |
English Title: | Debt and Deficit Fluctuations in a Time-Consistent Setup |
Language: | English |
Keywords: | optimal taxation; time-consistent policy; market incompleteness. |
Subjects: | E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, 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, and General Outlook > E62 - Fiscal Policy H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H21 - Efficiency ; Optimal Taxation H - Public Economics > H6 - National Budget, Deficit, and Debt > H63 - Debt ; Debt Management ; Sovereign Debt |
Item ID: | 63729 |
Depositing User: | Daryna Grechyna |
Date Deposited: | 21 Apr 2015 16:11 |
Last Modified: | 28 Sep 2019 16:31 |
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URI: | https://mpra.ub.uni-muenchen.de/id/eprint/63729 |