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dc.contributor.authorOcchino, Filippoen_US
dc.date.accessioned2009-01-29T15:51:55Z-
dc.date.available2009-01-29T15:51:55Z-
dc.date.issued2005en_US
dc.identifier.urihttp://hdl.handle.net/10419/23239-
dc.description.abstractHow should taxes, government expenditures, the primary and fiscal surpluses and government liabilities be set over the business cycle? We assume that the government chooses expenditures and taxes to maximize the utility of a representative household, utility is increasing in government expenditures, only distortionary labor income taxes are available, and the cycle is driven by exogenous technology shocks. We first consider the commitment case, and characterize the Ramsey equilibrium. In the case that the utility function is constant elasticity of substitution between private and public con- sumption and separable between the composite consumption good and leisure, taxes, government expenditures and the primary surplus should all be constant positive frac- tions of production, and both government liabilities and the fiscal surplus should be positively correlated with production. Then, we relax the commitment assumption, and we show how to determine numerically whether the Ramsey equilibrium can be sustained by the threat to revert to a Markov perfect equilibrium. We find that, for realistic values of the preferences discount factor, the Ramsey equilibrium is sustain- able. Keywords: Fiscal policy, Commitment, Time-consistency, Ramsey equilibrium, Markov perfect equilibria, Sustainable equilibria.en_US
dc.language.isoengen_US
dc.publisheren_US
dc.relation.ispartofseriesWorking papers / Rutgers University, Department of Economics 2005,02en_US
dc.subject.jelE62en_US
dc.subject.ddc330en_US
dc.subject.keywordFiscal policyen_US
dc.subject.keywordCommitmenten_US
dc.subject.keywordTime-consistencyen_US
dc.subject.keywordRamsey equilibriumen_US
dc.subject.keywordMarkov perfect equilibriaen_US
dc.subject.keywordSustainable equilibriaen_US
dc.subject.stwFinanzpolitiken_US
dc.subject.stwÖffentliche Ausgabenen_US
dc.subject.stwKonjunkturen_US
dc.subject.stwEinkommensteueren_US
dc.subject.stwOptimale Besteuerungen_US
dc.subject.stwTheorieen_US
dc.titleOptimal fiscal policy over the business cycleen_US
dc.typeWorking Paperen_US
dc.identifier.ppn493714650en_US
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungen-
Appears in Collections:Working Papers, Department of Economics, Rutgers University

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