RT Generic
T1 Markov-perfect optimal fiscal policy : the case of unbalanced budgets
A1 Ortigueira, Salvador
A1 Pereira, Joana
A1 Pichler, Paul
A2 Universidad Carlos III de Madrid. Departamento de Economía, 
AB We study optimal time-consistent fiscal policy in a neoclassical economy with endogenous government spending, physical capital and public debt. We show that a dynamic complementarity between the households’ consumption-savings decision and the government’s policy decision gives rise to a multiplicity of expectations-driven Markov-perfect equilibria. The long-run levels of taxes, government spending and debt are not uniquely pinned down by economic fundamentals, but are determined by expectations over current and future policies. Accordingly, economies with identical fundamentals may significantly differ in their levels of public indebtedness
SN 2340-5031
YR 2012
FD 2012-10-29
LK http://hdl.handle.net/10016/15788
UL http://hdl.handle.net/10016/15788
LA eng
NO This author isgrateful for financial support from the Spanish Ministerio de Ciencia e Innovación under grant 2011/00049/001
DS e-Archivo
RD 28 abr. 2024