@techreport{Mayer2008Countercyclical,
abstract = {In this paper, we explore the benefits from a supply-side oriented fiscal tax policy within the framework of a New Keynesian DSGE model. We show that countercyclical tax rules, which are contingent on the observed welfare gap or on the cost-push shock and levied on value added, remarkably reduce the adverse impact of cost-push shocks on welfare. We state that the tax rule establishes a path for the evolution of marginal cost at the firm level that largely prevents built up of price dispersion. We highlight that this tax policy is also effective under a balancedbudget regime. Hence, fiscal policy can disencumber monetary policy in the light of cost-push shocks.},
address = {W\"{u}rzburg},
author = {Eric Mayer and Oliver Grimm},
copyright = {http://www.econstor.eu/dspace/Nutzungsbedingungen},
keywords = {E32; E61; E62; 330; Countercyclical fiscal policy; welfare costs; nominal rigidities; Antizyklische Finanzpolitik; Soziale Kosten; Wohlfahrtseffekt; Preisspanne; Dynamisches Gleichgewicht; Ungleichgewichtstheorie; Theorie},
language = {eng},
number = {78},
publisher = {Univ., Lehrstuhl f\"{u}r VWL 1},
title = {Countercyclical taxation and price dispersion},
type = {W\"{u}rzburg economic papers},
url = {http://hdl.handle.net/10419/38820},
year = {2008}
}
