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http://hdl.handle.net/10419/65766
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| Title: | | Rule-of-thumb consumers and labor tax cut policy in the zero lower bound  |
| Authors: | | Kaszab, Lorant |
| Issue Date: | | 2012 |
| Series/Report no.: | | Cardiff Economics Working Papers E2012/13 |
| Abstract: | | This paper finds that labor tax cut can be an effective policy tool to mitigate the negative effects of a shock that made the zero lower bound on the nominal interest rate binding if the economy features rule-of-thumb households (besides Ricardian ones) and nominal rigidities in prices and wages. Our results are meant to contribute to the discussion initiated by Eggertsson (2010a) who found labor tax cut policy destabilising under zero nominal interest rate in a New Keynesian economy consisting only Ricardian consumers. |
| Subjects: | | fiscal policy zero lower bound labor tax cut New Keynesian |
| JEL: | | E52 E62 |
| Document Type: | | Working Paper |
| Appears in Collections: | | Cardiff Economics Working Papers
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