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Title:Government budget deficits in large open economies PDF Logo
Authors:Buiter, Willem H.
Sibert, Anne C.
Issue Date:2011
Series/Report no.:CESifo working paper: Fiscal Policy, Macroeconomics and Growth 3476
Abstract:Large and growing levels of public debt in the United States, United Kingdom, Japan and the Euro Area raise new interest in the cross-country effects of a large open economy's deficits. We consider a dynamic optimising model with costly tax collection and exogenously given public spending and initial debt. We ask whether the externalities associated with an individual country's deficits are positive or negative. We characterise the path of taxes in the Nash equilibrium where policy makers act nationalistically and compare this outcome to the global optimal outcome.
Subjects:fiscal policy
international policy coordination
optimal taxation
JEL:E62
F42
H21
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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